Wall Street falls as rising Treasury yields, oil prices deliver double blow

Wall Street closed broadly lower Tuesday (local time) as rising US Treasury yields and surging global oil prices weighed on investor sentiment.

The Dow Jones Industrial Average fell 328.09 points, or 0.63 percent, to close at 52,093.11. The S&P 500 dropped 34.25 points, or 0.45 percent, to finish at 7,585.73. The tech-heavy Nasdaq Composite shed 204.84 points, or 0.78 percent, to end at 25,981.57.

Selling pressure in the US Treasury market intensified Tuesday, pushing yields to fresh highs. The 10-year Treasury yield climbed as high as 5.041 percent in the morning — its highest level since July 2007 — before paring some gains. As of 3 p.m. local time, it stood at 4.995 percent, up 3.5 basis points from the previous session. The 2-year yield rose 2.8 basis points to 4.661 percent, while the 30-year yield gained 3.6 basis points to 5.362 percent.

Oil prices surged on fears that supply disruptions in the Middle East could prove prolonged. Brent crude futures for November delivery settled up 2.90 percent at $108.75 a barrel, while West Texas Intermediate for October delivery rose 4.38 percent to $105.83.

The sharp rally in crude was driven by expectations that supply outages from Saudi Arabia would persist. The kingdom halted oil loading operations at its Yanbu terminal on the Red Sea after Houthi rebels — a pro-Iran militia from Yemen — struck its east-west pipeline, forcing its closure. Adding to the upward pressure, three oil fields in Libya also went offline.

Concerns that high interest rates and elevated oil prices would erode consumer spending hammered shares of restaurant and retail companies and dampened appetite for riskier assets. Cryptocurrency-related stocks also took a hit after the US Senate failed to advance the Digital Asset Market Clarity Act — commonly known as the Clarity Act — a comprehensive regulatory framework for virtual assets, deepening political uncertainty around the sector. Coinbase fell more than 10 percent and Robinhood dropped 3.4 percent. Bitcoin also slid 5.3 percent, falling below $75,000.

AI-related stocks, which had tumbled the previous day on concerns about a slowdown in AI development, recovered much of their losses as bargain hunters stepped in. Nvidia recouped its previous-day decline to close up 0.6 percent, while AMD rose 2.2 percent.

Meanwhile, the CME FedWatch tool put the probability of the Federal Reserve raising its benchmark interest rate by 25 basis points at its Wednesday (local time) FOMC meeting at 94.5 percent.