U.S. stocks slide as crude jumps and 10-year yields touch a 19-year high

Tide Research — U.S. equities extended losses on Tuesday as a sharp rally in oil and a surge in Treasury yields tightened financial conditions. The Dow Jones Industrial Average fell 0.63% to 52,093.11, the S&P 500 lost 0.45% to 7,585.73, and the Nasdaq dropped 0.78% to 25,981.57. Volatility was choppy. The VIX finished down 0.12 points at 16.98 after climbing nearly 8% intraday. Crude prices spiked on fresh supply risks. NYMEX October WTI settled at $105.83 a barrel, up 4.38%, while November Brent closed at $108.75, up 2.90%. Diesel futures settled at a record high. The cost of shipping U.S. crude to Asia jumped to a record $44.8 million, versus about $17.8 million before the outbreak of the Iran war. Energy stocks rallied across the board, making the sector the day's top performer. ConocoPhillips gained 3.34%, Occidental Petroleum rose 2.81%, Chevron added 2.62%, and ExxonMobil advanced 2.54%. Rates also drove the tape. The 10-year U.S. Treasury yield climbed to an intraday high of 5.041%—its highest level since 2007—before easing to end up 0.82 basis points at 4.996%. The 30-year yield rose 1.73 basis points to 5.365%, while the 2-year yield slipped 0.57 basis points to 4.654%. Markets are now assigning a 94% probability to a 25-basis-point Fed hike in September. A Reuters survey showed more than 80% of economists expect the Federal Reserve to raise rates by 25 basis points at this meeting, taking the target range to 3.75%–4.00%. Attention has shifted from the hike itself to the dot plot and what it signals about the path ahead. Global bond markets remained under pressure as investors weighed the risk that Middle East geopolitical tension could add to inflation and keep central banks hawkish. In Europe, the UK 10-year yield rose 2 basis points to 5.386% and Germany's 10-year yield climbed 1.9 basis points to 3.533%. Oil's jump was tied to supply disruptions. A shutdown of Saudi Arabia's East–West pipeline and a halt in production at Libyan oil fields added new risks, on top of supply losses linked to the conflict in Iran. U.S. Energy Secretary Wright said Monday the Saudi pipeline disruption should be measured in days and could restart soon, while UK officials warned it may be effectively offline for up to six weeks. Traders focused on physical supply signals, with limited response to verbal reassurances. Semiconductors bucked the broader market, snapping a recent string of steep declines. The Philadelphia Semiconductor Index rose 1% to 11,250.38. Skyworks Solutions surged more than 13%, Qorvo climbed 9.34%, Qualcomm added 4.25%, AMD rose 2.19%, and ON Semiconductor gained 2.16%. ARM, ASML, and Marvell Technology each rose more than 1%. Memory names diverged after an early lift: SK Hynix fell 0.46%, SanDisk dropped 1.36%, Micron Technology edged up 0.39%, and Seagate Technology slid 4.19%. The mixed performance underscored ongoing rotation within the chip complex. Most mega-cap tech stocks finished lower. Amazon fell more than 2%, Microsoft lost 1.64%, Alphabet slipped 1.26%, Tesla declined 0.67%, and Apple eased 0.52%. Nvidia rose 0.57% and Meta gained 0.70%. The Wind China U.S. Tech Seven Giants Index fell 0.68% to 71,610.95. Oracle remained in focus after outlining job cuts tied to its AI buildout. Shares fell 3.07% to $140.35, extending the stock's losing streak to five sessions. Oracle said it eliminated about 21,000 positions in its latest fiscal year, reducing headcount by roughly 13%, as it shifts resources toward AI infrastructure. First-quarter capital expenditures surged to $28.5 billion from $8.5 billion a year earlier. Morgan Stanley kept an equal-weight view, saying gross margin performance and free-cash-flow conversion in the AI infrastructure business are key to any valuation re-rating. Founder Larry Ellison also canceled a planned stock sale valued at about $7.5 billion. Chinese ADRs broadly weakened. The Nasdaq Golden Dragon China Index fell 1.14%, with XPeng down 4.48%, Li Auto off 3.37%, and Flash Express tumbling more than 15%. The dollar strengthened and crypto assets sold off. The U.S. Dollar Index rose 0.23% to 99.616. The yen weakened to 155.09 per dollar and the euro fell to 1.1543. In Washington, the U.S. Senate failed to reach the 60-vote threshold to advance the CLARITY Act, with a 49–50 vote. Bitcoin dropped 3.06% over 24 hours, hitting an intraday low of $74,910. Ethereum fell 3.1% over 24 hours and plunged more than 8.3% intraday to around $2,407. Precious metals extended losses under the weight of rising yields. COMEX gold futures slid 1.56% to $4,340.00 an ounce, and COMEX silver fell 2.20% to $63.76 an ounce. Events to watch: • Federal Reserve rate decision and dot plot (2:00 AM Beijing time Thursday). A 25-basis-point hike is already fully priced; the key swing factor is whether the dot plot implies another hike later this year. A more hawkish signal could push long-end yields higher, while dovish guidance could offer near-term relief. The decision also marks the first major credibility test for Fed Chair Walsh since taking office. • U.S. August retail sales (8:30 PM Beijing time). This is the last major consumer-data release ahead of the Fed decision. Consensus looks for a 0.3% month-on-month increase after a 0.6% decline previously. A stronger print could reinforce tightening expectations and lift Treasury yields further; weaker data may temporarily ease pressure in rates markets. With oil surging and long-term yields breaking 5%, small surprises in consumer data could have an outsized impact on pricing.