Synopsis
Wall Street closed lower as rising U.S. Treasury yields and persistent inflation fears pressured equities, with the Nasdaq leading losses. Elevated oil prices amid Iran tensions and uncertainty over Federal Reserve policy weighed on sentiment, while investors stayed cautious ahead of Nvidia earnings, seen as critical for sustaining AI-driven market momentum.
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Reuters Wall Street’s main indexes closed lower on Tuesday after the benchmark 10-year Treasury yield climbed to its highest level in more than a year on mounting inflation concerns. Elevated oil prices and anxiety over the lack of a peace agreement between the U.S. and Iran also weighed on investor sentiment.
The S&P 500 and the technology-heavy Nasdaq marked their third straight day of declines as investors booked profits following a strong rally since late March. Markets also weighed the possibility that the Federal Reserve could resume interest rate hikes if inflation remains persistent.
Although Brent crude futures settled down 0.73%, they remained above $110 a barrel, as traders tracked developments in the Middle East conflict, which has nearly shut the Strait of Hormuz, a key energy route. U.S. President Donald Trump said he had delayed a planned military strike on Iran but warned that action could resume if negotiations fail, even as he claimed Iran was pushing for a deal.
U.S. Vice President JD Vance said both sides had made progress in talks and were keen to avoid a renewed military campaign, offering some hope for de-escalation.
Meanwhile, the 10-year Treasury yield surged to 4.687%, its highest since January 2025, before easing slightly to around 4.65%, as inflation expectations strengthened.
“There’s nothing constructive that’s leading us to believe there’s going to be a ceasefire with any sort of substance. As long as there is nothing happening along those fronts, oil is remaining high, bond yields are remaining high, and the market’s anxiety levels are getting increasingly elevated,” said Michael James, managing director and equity sales trader at Rosenblatt Securities. He added, “As each day goes by and nothing substantive is happening, that becomes more problematic. That’s why you’re seeing equities having a tough time in the last few days.”
Traders have begun pricing in higher odds of rate hikes, with a 25-basis-point increase in December seen at a 41.7% probability and a 50-basis-point hi
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