Climbing Yields, Crude Oil Prices May Lead To Extended Pullback On Wall Street

The major U.S. index futures are currently pointing to a lower open on Tuesday, with stocks likely to see further downside following the pullback seen over the two previous sessions.

Weakness among technology stocks is likely to weigh on Wall Street, as reflected by the 1.3 percent slump by the tech-heavy Nasdaq 100 futures.

Tech stocks may come under pressure amid an increase in treasury yields, which has lifted the 30-year bond yield to its highest levels in nearly two decades.

Treasury yields are moving to the upside amid lingering concerns about the outlook for inflation due to the ongoing conflict in the Middle East.

U.S. crude oil futures are climbing by 0.8 percent after surging by 2.6 percent on Monday due to fading hopes of a peace deal between the U.S. and Iran.

Daniela Hathorn, Senior Market Analyst at Capital.com noted the increase in treasury yields comes “despite softer recent economic data reducing expectations for an imminent Fed hike.”

“Instead, the long end is responding to persistent inflation risks, heavy government borrowing and growing competition for capital—including debt issuance associated with the AI investment boom,” Hathorn said.

She added, “That creates an uncomfortable environment for equities because financial conditions can tighten even without the Fed raising rates.”

Stocks showed a lack of direction early in the session on Monday but moved mostly lower over the course of the trading day. The major averages all moved to the downside, extending the modest pullback seen during last Friday’s session.

The S&P 500 ended the day near its lows of the session, down 40.70 points or 0.5 percent at 7,745.06, pulling back further off the record closing high set last Thursday.

The narrower Dow also slid 272.63 points or 0.5 percent to 53,459.78, while the Nasdaq fell 84.25 points or 0.3 percent to 26,644.91.

The weakness that emerged on Wall Street came as the price of crude oil moved sharply higher amid concerns about a re-escalation of the conflict in the Middle East, with U.S. crude oil futures surging by more than 2 percent.

Crude oil futures spiked amid indications Iran has ruled out talks with the U.S. to extend a 60-day ceasefire that expires today.

“We did not start any negotiations at all, and the U.S. violated the understanding from the very beginning; therefore, the 60-day issue is not relevant,” Iran Foreign Ministry spokesman Esmail Baghaei said, according to state news agency Tasnim.

Adding to worries about a broader conflict, President Donald Trump threatened to bomb Oman during an interview with Fox News, warning, “If Oman gets in the way, we’ll bomb the s— out of them.”

Trump’s threat comes as Iran and Oman appear to be moving closer to an understanding over the management of the Strait of Hormuz.

Airline stocks moved sharply lower over the course of the session amid the surge in crude oil prices, dragging the NYSE Arca Airline Index down by 2.8 percent.

Substantial weakness was also visible among software stocks, as reflected by the 2.7 percent plunge by the Dow Jones U.S. Software Index.

Telecom, computer hardware and housing stocks also saw considerable weakness, while oil producer, biotechnology and semiconductor stocks showed strong moves to the upside.

Commodity, Currency Markets

Crude oil futures are climbing $0.49 to $84.99 a barrel after surging $2.10 to $84.50 a barrel on Monday. Meanwhile, after climbing $36.40 to $4,473.70 an ounce in the previous session, gold futures are falling $20.20 to $4,453.50 an ounce.

On the currency front, the U.S. dollar is trading at 159.68 yen compared to the 159.43 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is trading at $1.1574 compared to yesterday’s $1.1579.

Asia

Asian stocks ended mostly lower on Tuesday as elevated oil prices and rising bond yields amid fading hopes for a deal to end the Iran-U.S. war stoked inflation concerns.

Brent crude futures climbed above $91 a barrel after U.S. President Donald Trump said that he is not interested in renewing the expiring ceasefire agreement with Iran and threatened to bomb Oman if it “gets in the way” of a deal with Iran on the Strait of Hormuz.

The U.S. dollar index lingered near two-month lows ahead of a slew of data such as building permits, export prices, housing starts, import prices, industrial production, and pending home sales due later in the day. Gold was subdued at $4,402 an ounce after rising for two straight sessions.

China’s Shanghai Composite Index edged up 0.2 percent to 3,990.30 after nine Chinese government departments issued a policy document unveiling a set of measures to unlock the consumption potential of counties and smaller cities.

Hong Kong’s Hang Seng Index closed marginally higher at 25,471.15, reversing an early slide.

Japanese markets slumped due to profit taking in the AI and memory sectors. The Nikkei 225 Index plunged 2.5 percent to 67,460.73, while the broader Topix Index closed 1.1 percent lower at 4,140.22. Kioxia Holdings plummeted 7.6 percent, Advantest declined 5.1 percent and Tokyo Electron shed 6.2 percent.

Seoul stocks ended a volatile session sharply lower as traders returned from a long holiday weekend. The Kospi Index tumbled 1.6 percent to 6,869.83, snapping a five-day winning streak due to profit taking in large-cap stocks. Samsung Electronics fell 2.2 percent and Hyundai Motor lost 4 percent.

Australian markets finished marginally lower as Middle East worries offset improved August consumer sentiment data.

While the big four banks fell on housing market jitters, miner BHP advanced 2.7 percent and biotech giant CSL soared 17.3 percent after delivering strong earnings.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index rallied 1.1 percent to 13,866.18 on the back of strong results in the energy sector, with Vector rising more than 1 percent and Mercury NZ climbing 2.6 percent after posting strong fiscal 2026 earnings.

Europe

European stocks are broadly lower on Tuesday amid rising U.S.-Iran tensions. Brent crude futures climbed above $91 a barrel, while Euro zone long-dated bond yields hit multi-year highs as U.S. President Donald Trump ruled out extending a temporary ceasefire agreement with Iran and Tehran said it is preparing to shift to a “fully offensive” military posture.

A cargo vessel was struck by a projectile while transiting the Strait of Hormuz, the UKMTO said today, deepening concerns over shipping safety.

In economic releases, the U.K. unemployment rate stood at 4.9 percent in the June quarter, unchanged from the preceding period, the Office for National Statistics said. The number of vacancies decreased by 6,000 to 707,000 in the three months to July.

The U.S. dollar edged up slightly but held near multi-month lows against its major peers ahead of a slew of data, including reports on U.S. import/export prices, housing starts, industrial production and pending home sales later in the day.

The French CAC 40 Index is down by 0.4 percent and the German DAX Index is down by 0.3 percent, although the U.K.’s FTSE 100 Index has bucked the downtrend and risen by 0.2 percent.

In corporate news, Basilea Pharmaceutica shares have soared. The Swiss biopharma company raised its 2026 profit outlook after reporting a 77 percent year-on-year jump in first-half net profit.

HgCapital Trust has moved to the downside. The British investment trust announced that it would invest around 20 million pounds through its manager Hg in Nourish Care, a nutritional diet consulting platform.

Mining giant BHP has moved modestly higher after reporting a 9 percent increase in annual net profit.

U.S. Economic News

New residential construction in the U.S. plummeted by much more than expected in the month of July, according to a report released by the Commerce Department on Tuesday.

The Commerce Department said housing starts nosedived by 12.4 percent to an annual rate of 1.239 million in July after skyrocketing by 19.7 percent to a revised rate of 1.415 million in June.

Economists had expected housing starts to plunge by 5.4 percent to an annual rate of 1.350 million from the 1.427 million originally reported for the previous month.

Meanwhile, the report said building permits surged by 5.0 percent to an annual rate of 1.443 million in July after tumbling by 2.6 percent to a revised rate of 1.374 million in June.

Building permits, an indicator of future housing demand, were expected rise by 0.2 percent to an annual rate of 1.370 million from the 1.367 million originally reported for the previous month.

The Labor Department also released a report on Tuesday showing an unexpected decline in import prices in the U.S. in the month of July.

The report said import prices fell by 0.4 in July following a revised 0.3 percent decrease in June.

Economists had expected import prices to inch up by 0.1 percent compared to the 0.3 percent increase originally reported for the previous month.

The Labor Department also said export prices tumbled by 1.3 percent in July after falling by a revised 0.7 percent in June.

Export prices were expected to come in unchanged compared to the 0.6 percent decrease originally reported for the previous month.

At 9:15 am ET, the Federal Reserve is scheduled to release its report on industrial production in the month of July. Industrial production is expected to rise by 0.3 percent in July after inching up by 0.1 percent in June.

The National Association of Realtors is due to release its report on pending home sales in the month of July at 10 am ET. Pending home sales are expected to jump by 1.4 percent in July after plummeting by 5.4 percent in June.