US stocks fall as Treasury yields and oil surge

U.S. equities fell for a second straight session Tuesday as a relentless climb in Treasury yields and another leg higher in crude oil forced investors to price in a genuine risk that the Federal Reserve will raise interest rates this month.

The Nasdaq 100 led the decline, sliding 1.4% as the most expensive corners of software cracked.

West Texas Intermediate crude rose 3.2% to $88.53 a barrel, a second consecutive advance, with the blockage of the Strait of Hormuz still choking regional exports after renewed U.S.-Iran strikes in the Persian Gulf.

Brent added 2.5% to $92.78.

The knock-on effects are spreading.

Asian spot LNG prices hit a five-month high, EU natural gas jumped 4.2% and heating oil surged 5%, keeping the inflation impulse alive well beyond the crude complex.

The yield on the 10-year Treasury note climbed to 4.78%, up roughly 1 basis point and higher for a fifth straight session, its loftiest level since January 2025.

The 2-year yield rose 2 basis points to 4.38%, while the 30-year bond held at 5.25%.

Markets now price in roughly a 68% probability of a 25-basis-point rate hike from the Fed this month, up sharply from about 40% a week ago, after Fed Chair Kevin Warsh reiterated his commitment to bringing inflation down at the Jackson Hole Symposium.

A hotter-than-expected 3.3% flash reading on Eurozone inflation added to the global tightening consensus, with the European Central Bank now widely expected to follow.

The S&P 500 fell 0.5% to 7,650, hitting a four-week low earlier in the session, while the Dow Jones Industrial Average shed 0.5% to 52,939.

The Nasdaq 100 was the clear laggard, down 1.4% to 29,054.

The Russell 2000 fell 0.7% to 2,935.

Gold offered no shelter, sliding 1.6% to $4,368 an ounce as rate-hike expectations lifted real yields, leaving bullion struggling below $4,400.

Silver dropped 1.9% to $65.27.

Tuesday’s Performance In Major US Indices Index Last % Change MTD YTD S&P 500 7,650 -0.5% -0.5% +11.8% Dow Jones 52,939 -0.5% -0.5% +10.2% Nasdaq 100 29,054 -1.4% -1.4% +15.1% Russell 2000 2,935 -0.7% -0.7% +18.5% Updated by 12:30 PM ET According to the Pro platform: The Vanguard S&P 500 ETF (NYSE: VOO ) fell 0.5%.

The SPDR Dow Jones Industrial Average ETF Trust (NYSE: DIA ) slid 0.5%.

The Invesco QQQ Trust (NASDAQ: QQQ ) dropped 1.4%.

The iShares Russell 2000 ETF (NYSE: IWM ) declined 0.7%.

Software Multiples Snap While Defensives Catch A Bid The Consumer Staples Select Sector SPDR Fund (NYSE: XLP ) led all S&P 500 sectors with a 0.8% gain, the textbook defensive response to a hawkish rates shock.

The Health Care Select Sector SPDR Fund (NYSE: XLV ) rose 0.6%, the Utilities Select Sector SPDR Fund (NYSE: XLU ) added 0.5% and the Energy Select Sector SPDR Fund (NYSE: XLE ) gained 0.3% on the crude bid.

At the other end, the Consumer Discretionary Select Sector SPDR Fund (NYSE: XLY ) fell 1.2%, with the Technology Select Sector SPDR Fund (NYSE: XLK ) and the Industrials Select Sector SPDR Fund (NYSE: XLI ) each down 1.1%.

The Materials Select Sector SPDR Fund (NYSE: XLB ) shed 0.8%.

Among industry groups, the VanEck Agribusiness ETF (NYSE: MOO ) was the standout gainer, up 1.1% as wheat pushed toward a three-and-a-half-year high and soybeans jumped 2.2%.

The iShares Biotechnology ETF (NASDAQ: IBB ) added 0.4%.

On the downside, the VanEck Gold Miners ETF (NYSE: GDX ) tumbled 2.0% alongside bullion, the First Trust Dow Jones Internet Index Fund (NASDAQ: FDN ) lost 1.5%, and the U.S.

Global Jets ETF (NYSE: JETS ) dropped 1.3% as higher jet fuel costs bit.

Axon Enterprise, Inc. (NASDAQ: AXON ) was the worst performer in the index, plunging 9.2% to $514.

Today’s move looks like the sharpest expression of a broad de-rating in the market’s most richly valued software names.

CrowdStrike Holdings, Inc. (NASDAQ: CRWD ) fell 6.9% to $215.06 even after announcing it had crossed a $2 billion milestone with channel partner Optiv, with the stock giving back part of a roughly 97% year-to-date advance through Monday’s close.

The selling swept the entire cybersecurity complex.

Palo Alto Networks, Inc. (NASDAQ: PANW ) dropped 5.4% to $361.33 with investors de-risking ahead of its fiscal fourth-quarter results, due after the close Tuesday.

Fortinet, Inc. (NASDAQ: FTNT ) slid 5.3% to $161.85 with no company-specific catalyst, caught in the same sector-wide retreat.

The de-rating extended to electronic design automation.

Cadence Design Systems, Inc. (NASDAQ: CDNS ) fell 5.6% to $319.72, with peer Synopsys, Inc. (NASDAQ: SNPS ) down 3.6%.

Elsewhere in software, Oracle Corp. (NYSE: ORCL ) lost 4.6%, Datadog, Inc. (NASDAQ: DDOG ) fell 4.4% and ServiceNow, Inc. (NYSE: NOW ) shed 3.7%.