Chip Rout Pulls Stocks Down as Bond Angst Lingers: Markets Wrap
(Bloomberg) — A selloff in chipmakers sent stocks lower, with the market also falling as inflation anxiety and rising government debt kept bond yields elevated.
This year’s best-performing corner on Wall Street got pummeled, driving a closely watched gauge of semiconductor firms down by 5.5%. The Nasdaq 100 declined 1.5%. While Treasuries barely budged, 10-year yields hovered near the highest levels since early 2025. Oil topped $85, with the US and Iran stuck in a deadlock over control of the Strait of Hormuz.
“The investment hurdle rate is rising again,” said Florian Ielpo at Lombard Odier Investment Managers. “This time through a combination of oil, fiscal supply and long-end term premium rather than a renewed acceleration in short-rate expectations.”
Longer-dated bonds are at the epicenter of angst about everything from inflation to the debt-laden artificial-intelligence boom. One fear is that geopolitical turmoil will make economies more prone to supply shocks, with investors also worried that governments will fail to rein in spending.
President Donald Trump insisted that there were no talks ongoing with Iran, leaving the simmering conflict in the Middle East and control of the Strait of Hormuz stuck in limbo.
The upswing in oil has pushed bond yields higher, worsening already fragile fiscal dynamics, noted Elias Haddad at Brown Brothers Harriman & Co.
The recent bond selloff appears to reflect investors demanding greater compensation for fiscal, geopolitical and policy uncertainty, said Jonas Goltermann at Capital Economics. With governments reluctant to pursue meaningful fiscal consolidation and central banks constrained in their response, the market will remain vulnerable to renewed bouts of volatility, he added.
“We aren’t pushing the panic button,” veteran strategist Ed Yardeni wrote. “However, we are closely monitoring whether the bond vigilantes might do so.”
Yardeni pointed to the summer of 2023, when US yields surged from 4% to 5% in just a few months. That level ultimately proved attractive to buyers, and the firm says there may be a similar buying opportunity ahead.
“Higher interest rates don’t matter until they do,” said Matt Maley at Miller Tabak. “Therefore, the recent further rise in global bond yields is something investors will need to monitor very closely as we move through the rest of August and into the fall months.”
Corporate Highlights:
Meta Platforms Inc. is headed to court Tuesday for a high-stakes showdown with a coalition of state attorneys general over claims that the company deliberately designed Facebook and Instagram to encourage compulsive use among young users. Anthropic PBC’s revolving credit facility is set to rise above its roughly $10 billion target, according to people familiar with the matter, as the artificial-intelligence firm prepares for a highly anticipated initial public offering. Nvidia Corp. could be trading at a discount of as much as 50%, as investors overstate risks related to the leader in AI chips, according to Bank of America Corp. Home Depot Inc.’s results beat estimates in the latest quarter, a sign that spending on improvement projects is holding up despite high borrowing and housing costs. Klarna Group Plc cut expectations for how much revenue it will generate this year on the heels of foreign exchange pressures and weakening consumer spending in Germany, and announced plans for a new chief financial officer. Baidu Inc.’s revenue fell for a fifth consecutive quarter, reflecting a weakening position in ads as well as AI development against rivals like Moonshot. What Bloomberg Strategists say…
“Even as AI capex barrels past $1 trillion in the coming years, its growth rate is set to slow sharply. That threatens to cool the S&P 500’s earnings boom and take more steam out of AI favorites like chips.”
—Tatiana Darie, Macro Strategist, Markets Live. For the full analysis, click here.
Some of the main moves in markets:
Stocks
The S&P 500 fell 0.5% as of 1 p.m. New York time The Nasdaq 100 fell 1.5% The Dow Jones Industrial Average fell 0.1% The MSCI World Index fell 0.6% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was unchanged at $1.1580 The British pound was little changed at $1.3541 The Japanese yen was little changed at 159.59 per dollar Cryptocurrencies
Bitcoin rose 0.7% to $64,800.83 Ether rose 0.6% to $1,917.49 Bonds
The yield on 10-year Treasuries declined one basis point to 4.71% Germany’s 10-year yield advanced four basis points to 3.26% Britain’s 10-year yield advanced two basis points to 5.08% Commodities
West Texas Intermediate crude rose 0.6% to $85.04 a barrel Spot gold fell 1.2% to $4,363.83 an ounce ©2026 Bloomberg L.P.
