Nasdaq Plunges 1.25% in Early Trading to 26,310 as 30-Year Treasury Yield Hits 5.32% and Brent Crude Surges Past $91

Mumbai, Aug 18: US stocks tumbled at the opening bell on Tuesday, with the tech-heavy Nasdaq Composite leading the selloff as escalating geopolitical tensions in the Middle East and a relentless surge in government bond yields inflicted severe damage on growth and technology shares. The Nasdaq fell 334.06 points (1.25%) to 26,310.85 within the first hour of trading, while the benchmark S&P 500 dropped 42.02 points (0.54%) to 7,703.04, and the blue-chip Dow Jones Industrial Average showed relative resilience, slipping just 26.18 points (0.05%) to 53,433.60. The Russell 2000 Index, tracking smaller companies, declined 15.84 points (0.52%) to 3,041.70. 

The opening session data revealed a market under intense pressure from a toxic combination of Brent crude surpassing $91 per barrel, the 30-year Treasury yield touching 5.32% – its highest level since 2007 – and fading hopes for a diplomatic resolution between the United States and Iran. The CBOE Volatility Index, Wall Street’s fear gauge, jumped to its highest level in approximately two weeks as investors priced in heightened uncertainty. 

Tech Rout Deepens as Nasdaq Slides 1.25% and Chip Stocks Plunge Over 6% 

Technology shares bore the heaviest selling pressure, with Nasdaq 100 futures declining 351.5 points (1.17%) in premarket trading, reflecting nervousness about how elevated borrowing costs could impact the present value of future tech profits. The Nasdaq Composite opened at 26,346.88, traded between a low of 26,289.68 and a high of 26,422.50, and recorded a trading volume of 1.23 billion shares within the first hour, well below its average of 9.53 billion. 

Semiconductor stocks experienced a brutal selloff, with the Roundhill Memory ETF (DRAM) tumbling nearly 5% after outperforming broader indexes in the previous session. Western Digital (WDC) sank 5.86%, SanDisk (SNDK) dropped 6.76%, and Seagate Technology (STX) fell 5.65%, while Marvell Technology (MRVL) plunged 6.69% and Micron Technology (MU) declined 4.90%. Advanced Micro Devices (AMD) lost 4.82%, Intel (INTC) slumped 5.98%, Applied Materials (AMAT) retreated 5.06%, and Lam Research (LRCX) dropped 6.17%. ASML Holding (ASML) fell 4.31%, KLA Corporation (KLAC) declined 3.77%, and Texas Instruments (TXN) shed 3.34%. The broader iShares Semiconductor ETF (SOXX) declined 3.5% as investors rotated away from cyclical tech names amid rising uncertainty about the sustainability of the artificial intelligence trade. 

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Nvidia (NVDA), the bellwether of the AI revolution, declined 2.28%, while major tech peers showed mixed performance. Apple (AAPL) gained 0.40%, Microsoft (MSFT) slipped 0.15%, Alphabet (GOOGL) fell 0.69%, and Amazon (AMZN) dropped 1.33%. Meta Platforms (META) tumbled 3.49% ahead of a major social media addiction trial scheduled to begin on Tuesday, while Netflix (NFLX) shares bucked the trend with a 2.51% gain. Among the Dow components, Caterpillar (CAT) sank 3.29%, while Johnson & Johnson (JNJ) rallied 2.89% and Salesforce (CRM) jumped 2.84%. IBM (IBM) gained 1.35% and Visa (V) advanced 1.34% in early trading. 

30-Year Treasury Yield Hits 5.32% as US Fiscal Deficit Balloons to $432.3 Billion 

The bond market selloff intensified dramatically, pushing the 30-year Treasury yield to 5.32% – its highest level since June 2007 – while the 20-year yield climbed to 5.316% and the benchmark 10-year Treasury yield advanced to 4.74%, near levels not seen since January 2025. The yield on the 30-year bond added 1 basis point in early trading to trade at around 5.324%, while the 10-year yield added roughly 1.2 basis points to 4.736%. 

The surge in long-term yields stems from three interconnected factors: persistent inflation concerns driven by rising energy costs, heavy government borrowing requirements, and growing competition for capital from the artificial intelligence investment boom. 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.” 

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The US fiscal deficit jumped to $432.3 billion in July, the highest monthly total since March 2021, pushing the year-to-date shortfall to nearly $1.8 trillion. Interest payments to finance the nearly $40 trillion national debt have cost the government approximately $1.2 trillion this year alone. Investors are demanding higher premiums to finance governments running large fiscal deficits and to hedge against persistently sticky inflation, which remains well above the Federal Reserve’s 2% target even after recent tame inflation readings. 

Global bond markets mirrored the US trend, with Japan’s long-dated government bonds hovering near 40-year highs reached in May. Germany’s 30-year bond yield touched its highest level since 2011, while French 30-year government bond yields rose to a post-2008 high. The spread between US and Chinese 10-year Treasury yields widened to 303 basis points, reflecting growing divergence between the world’s two largest economies, as China’s 10-year government bond yield has persistently traded below that of the US since 2022 amid weak domestic demand. 

Brent Crude Surges Past $91 as Iran Ceasefire Expires and Trump Threatens Oman 

Crude oil futures advanced for a third consecutive session as hopes for a near-term peace deal between Washington and Tehran evaporated. Brent crude futures for October delivery climbed to $91.31 per barrel (up 0.48%), while US West Texas Intermediate futures for September advanced to $85.02 per barrel (up 0.62%), representing gains of approximately 50% year-to-date. The geopolitical trigger came as the 60-day interim peace agreement between the United States and Iran expired on Monday, with neither party expressing interest in extending the blueprint for a truce. 

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Iran signalled it would shift to a “fully offensive” military posture as negotiations for a permanent end to the conflict stalled, according to a senior Iranian official. Iran Foreign Ministry spokesman Esmail Baghaei stated, according to state news agency Tasnim: “We did not start any negotiations at all, and the US violated the understanding from the very beginning; therefore, the 60-day issue is not relevant.” President Donald Trump, in an interview with Fox News, threatened to ”bomb the s— out of” Oman if the Gulf nation interferes with US efforts in the Strait of Hormuz. On Tuesday, Trump posted on Truth Social that the US is not currently engaging in any ”talks or conversations” with Iran, nor are there any scheduled, and that the naval blockade “remains in full force and effect.” 

The UK Maritime Trade Operations reported that a vessel was hit by an unknown projectile while trying to transit the Strait of Hormuz, resulting in a crew casualty, further escalating supply disruption fears. Energy Secretary Chris Wright stated the administration is ”playing the long game” with the Islamic Republic, while envoy Jared Kushner said Trump would be patient on a deal. Persian Gulf producers, however, appear increasingly adept at shuttling oil through Hormuz, with Saudi Arabia now offering cargoes from outside the chokepoint. José Torres, a senior economist at Interactive Brokers, noted: “Crude prices are rising on renewed geopolitical tensions triggered by President Trump threatening Oman with military strikes and communicating that he is in no rush to end the Iran war.” 

Home Depot Gains 0.75% on $47.9 Billion Revenue Beat Amid Frozen Housing Market 

Home Depot (HD) bucked the broader market trend, gaining 0.75% to $340.41 after the home improvement retailer reported second-quarter results that surpassed analyst expectations. Revenue grew nearly 6% to $47.9 billion, exceeding the $47.3 billion forecast, while adjusted earnings rose 0.2% to $4.79 per share, above the $4.73 consensus estimate. The Atlanta-based company, which operates more than 2,300 retail stores across North America, saw same-store sales increase 1.7% , surpassing the roughly 1% expected, while US same-store sales jumped 1.3% , higher than the 0.9% projection.

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Chief Financial Officer Richard McPhail, who is temporarily leading the company alongside senior executive vice president Ann-Marie Campbell while CEO Ted Decker takes medical leave, noted “broad-based demand across the business as customers continued to engage in smaller projects.” McPhail told CNBC: “We continue to operate in what I call ‘frozen housing market’ conditions, but we also know that we’re taking share and that we’re serving our customers better every day.” The company reaffirmed its full-year guidance, which limited the stock’s upside despite the quarterly beat. 

Klarna Plunges 18% After Trimming Full-Year Guidance on German Market Weakness 

Klarna Group (KLAR) shares tumbled 18% at the opening bell after the Swedish buy-now-pay-later firm slashed its 2026 guidance across key metrics. The company now expects full-year revenue of $4.08 billion to $4.16 billion, down from its prior forecast of $4.34 billion, while gross merchandise volume guidance was reduced to $149 billion-$151 billion from $155 billion. Adjusted operating income projections were trimmed to $280 million-$300 million, with the midpoint falling below the previous $299 million estimate. The downward revision was attributed to weakening conditions in Germany, the company’s largest market. 

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The Stockholm-headquartered fintech firm also announced “planned transitions” for Chief Financial Officer Niclas Neglén and Chief Marketing Officer David Sandström, effective early next year. Despite the disappointing outlook, Klarna’s fiscal second-quarter earnings per share, revenue, and gross merchandise volume results all topped Visible Alpha consensus estimates. However, the guidance cut overshadowed the quarterly beat, with shares having already lost approximately one-third of their value since the start of the year. 

Baidu Shares Fall 7% as Chinese Tech Giant Misses Revenue Estimates 

US-listed shares of Baidu (BIDU) declined 7% after the Chinese search and artificial intelligence company reported second-quarter revenue of 31.3 billion yuan ($4.6 billion) , down 4% year-over-year and below analyst expectations. Adjusted earnings per American depositary share came in at 7.22 yuan ($1.06) , substantially missing the consensus forecast. The Beijing-based company, which operates China’s largest internet search engine, is undergoing a strategic transformation toward AI-focused cloud computing services and other artificial intelligence products. The earnings miss reflects ongoing challenges in China’s domestic market and intensifying competition in the AI space. 

Russell 2000 Slides 0.52% as Small-Cap Stocks Suffer Broad-Based Losses 

The Russell 2000 Index fell 15.84 points (0.52%) to 3,041.70, opening at 3,049.32 and trading in a range of 3,042.56 to 3,049.32. Small-cap stocks showed widespread weakness, with BE plunging 7.83%, AEIS dropping 7.83%, and CRDO tumbling 8.91%. FN suffered a dramatic 18.02% decline, while AAOI fell 9.11%, FORM dropped 9.08%, and MXL declined 8.85%. In the healthcare segment, BBIO gained 2.78%, while NAVN rose 2.82%. The industrials sector saw CRS decline 3.18% and STRL fall 5.52%, while CWST gained 1.63% and GHC rose 1.45%. The financials segment showed mixed performance, with UMBF declining 0.33% and JXN gaining 0.94%. 

Futures Point to Continued Weakness as Fed Minutes and Nvidia Earnings Loom 

At 8:23 a.m. ET, Dow E-minis were down 37 points (0.07%) , S&P 500 E-minis were down 33 points (0.42%) , and Nasdaq 100 E-minis were down 351.5 points (1.17%) , indicating continued selling pressure throughout the session. Money market data showed traders still pricing in a 96% chance of a 25-basis-point rate increase this year, though expectations for a hike as soon as September have moderated following tame inflation data last week. Investors now look to the minutes of the Federal Reserve’s July meeting, due on Wednesday, for further insights into policymakers’ assessment of the economic environment. 

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Kim Forrest, chief investment officer at Bokeh Capital Partners, commented: “The yields are troubling people because it portends a tighter environment and it’s going to be more expensive to borrow money. Especially in this whole AI thing where time to pay it back is uncertain. It makes for a nervous investor environment.” Strong earnings across several sectors, including some AI hyperscalers, had lifted the S&P 500 and the Dow to all-time highs earlier this month. The next test for the AI trade could be Nvidia’s earnings, due next week, as investors remain nervous about whether hefty AI spending is paying off. 

The opening session’s sharp decline reflects intensifying headwinds from rising oil prices and multi-year high government bond yields, which tighten financial conditions even without an immediate Federal Reserve rate hike. Investors should monitor the Federal Reserve’s July meeting minutes for clarity on monetary policy direction and assess the impact of sustained high yields on corporate borrowing costs. Geopolitical developments in the Middle East remain the primary driver of energy price volatility, while Nvidia’s upcoming earnings will provide crucial insights into the sustainability of the artificial intelligence trade and its sensitivity to rising discount rates. 

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