U.S. equity markets closed lower on Tuesday as investors continued pulling back from risk assets amid a sharp rise in Treasury yields, persistent inflation concerns, and uncertainty surrounding geopolitical tensions in the Middle East. The S&P 500 posted its third consecutive losing session, while technology stocks remained under pressure ahead of Nvidia’s highly anticipated earnings report.

Bond Market Selloff Shakes Equity Momentum

The primary driver behind Tuesday’s market weakness was another aggressive move higher in Treasury yields. The 30-year Treasury yield briefly climbed above 5.19%, reaching its highest level in nearly two decades, while the benchmark 10-year Treasury yield rose toward 4.7%, levels not seen since early 2025.

Rising yields are becoming an increasingly serious challenge for equity markets because they directly impact borrowing costs across the economy, including mortgages, credit cards, auto loans, and corporate financing. Higher rates also reduce the attractiveness of high-valuation growth stocks, particularly within the technology sector.

The S&P 500 fell 0.67% to close at 7,353.61, while the Nasdaq Composite declined 0.84% to 25,870.71. The Dow Jones Industrial Average lost more than 320 points as investors reduced exposure to risk-sensitive assets.

Market participants are increasingly concerned that inflation may remain elevated for longer than previously expected, especially as oil prices continue trading above $100 per barrel following ongoing tensions involving Iran and the Strait of Hormuz.

Technology Stocks Retreat Ahead of Nvidia Report

Technology and semiconductor shares once again led the market decline as investors positioned cautiously ahead of Nvidia’s quarterly earnings release scheduled for Wednesday after the close.

Nvidia shares slipped nearly 1%, while Qualcomm fell close to 4% and Broadcom declined roughly 2%. The recent pullback reflects investor anxiety surrounding elevated valuations after the semiconductor sector delivered extraordinary gains throughout the artificial intelligence rally.

Despite the recent weakness, analysts still expect Nvidia to report exceptionally strong earnings and guidance driven by continued demand for AI infrastructure, data centers, and advanced computing systems.

However, markets are becoming more sensitive to execution risks, supply chain bottlenecks, and the broader macroeconomic environment. Investors now appear increasingly aware that even strong earnings may not fully offset concerns tied to rising yields and tighter financial conditions.

The semiconductor sector has become one of the largest drivers of overall market performance, meaning Nvidia’s results may influence not only technology stocks but also broader ETF flows tied to the S&P 500 and Nasdaq-100.

Oil Prices and Fed Expectations Remain Central Risks

Energy markets remained volatile throughout the session as traders monitored developments involving Iran and U.S. foreign policy decisions. Although crude oil prices pulled back slightly after President Donald Trump reportedly paused planned military actions against Iran, Brent crude still held above $111 per barrel while West Texas Intermediate remained near $108.

Elevated oil prices continue fueling fears that inflation could accelerate further in coming months, potentially forcing the Federal Reserve to maintain restrictive monetary policy for longer than investors previously anticipated.

Some institutional investors are also beginning to speculate that bond markets are testing incoming Federal Reserve leadership amid growing concerns that policymakers may already be behind the curve on inflation management.

The combination of higher yields, expensive equity valuations, and geopolitical uncertainty is creating a more fragile environment for stocks after one of the strongest rallies in recent years.

Looking ahead, Nvidia’s earnings report, Treasury market stability, and oil price direction will likely determine whether markets can stabilize or if the current pullback evolves into a broader correction phase. Investors will also continue monitoring inflation expectations closely, as further upside surprises in yields could place additional pressure on both technology shares and consumer spending trends.