The New York Stock Exchange closed in the red on Tuesday, weighed down by rising bond yields, inflation fears, and the ongoing conflict in the Middle East.
The Dow Jones fell by 0.65%, the tech-heavy Nasdaq dropped 0.84%, and the broader S&P 500 declined by 0.67%.
Thirty-year bond yields soared to their highest level in 19 years, reaching 5.19% during Tuesday’s session. This compares to 5.12% the day earlier and 4.61% before the first Israeli-American strikes in Iran in late February.
The yield on ten-year US government bonds jumped to 4.69%, hitting a level not seen since early 2025, up from Monday’s close of 4.59%. Prior to the conflict in the Middle East, the yield stood at 3.94%.
Analysts say inflation concerns are driving the bond yield increases, compounded by the diplomatic stalemate in the Middle East. “The paralysis of the Strait of Hormuz, a vital shipping route for 20% of the world’s oil, remains a major factor,” noted Sam Burns of Mill Street Research.
As inflation erodes the value of loaned capital, lenders are demanding higher interest rates as compensation for the increased risk.
Wall Street had shrugged off these worries during the first two months of the crisis, buoyed by strong corporate earnings and robust growth in the tech sector. However, as earnings reports dwindle, investors are now paying greater attention to rising bond yields.
This shift has heightened expectations that the US Federal Reserve may move towards tighter monetary policy by year-end, according to CME FedWatch. Investors generally prefer lower interest rates, which boost corporate growth.
Adding to market anticipation, Nvidia is set to release its quarterly results on Wednesday. The semiconductor giant has been a key player in the recent stock-market enthusiasm around artificial intelligence. “Nvidia regularly delivers outstanding results,” said John Belton of Gabelli Funds, expecting this trend to continue. Still, Belton highlighted long-term concerns about returns on investment.
Later this week, the market will also monitor earnings reports from retail giants Walmart and Target.
Among individual stocks, Home Depot posted gains of 0.87% to close at $302.42, rebounding after an initial dip thanks to better-than-expected first-quarter results. The home improvement retailer reaffirmed its full-year forecast, citing resilient consumer demand despite mounting economic challenges.
Shake Shack surged by 7.38% to $64.09, following disclosures that top executives, including its CEO, purchased over $3 million worth of company shares. This was revealed in filings submitted to the US Securities and Exchange Commission.
