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 growing anxiety about inflation 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 1.7%. While Treasuries barely budged, 10-year yields hovered near the highest levels since early 2025. Oil settled around $85, with the US and Iran stuck in a deadlock over control of the Strait of Hormuz.
“The combination of higher energy costs and higher long-term borrowing costs is becoming increasingly uncomfortable,” said Fawad Razaqzada at Forex.com. “Equity investors have finally started to respond by going a bit defensive.”
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.
The supply of debt financing from AI demand and government deficits looks to keep upward pressure on yields, which is likely to take a little wind out of the sails that the strong earnings are bringing, according to veteran strategist Louis Navellier.
“Thankfully, with earnings soaring and profit margins at all-time highs, stocks can still be seen as attractive even at higher interest rates,” he said.
Ed Yardeni says he’s not pushing the panic button, but is keeping a close eye on whether the “bond vigilantes” might do so.
The founder of his eponymous research firm coined that term in the 1980s to describe investors selling bonds to set the government back on a course of fiscal restraint.
“We are sticking with our view that the US bond yield should continue to trade in a normal range of 4%-5%, without causing any adverse consequences for the economy and corporate earnings,” Yardeni wrote. “Nevertheless, now that the yield is approaching the top of this range, we are monitoring the activities of the bond vigilantes more closely.”
Higher interest rates don’t matter until they do, noted Matt Maley at Miller Tabak. Therefore, the recent 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, he added.
Corporate Highlights:
Meta Platforms Inc. has deceived the public for years by targeting children on Facebook and Instagram with technology designed to turn them into compulsive users and drive up advertising revenue, a lawyer at the California attorney general’s office told a jury. 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 0.6% as of 3 p.m. New York time The Nasdaq 100 fell 1.7% The Dow Jones Industrial Average fell 0.1% The MSCI World Index fell 0.7% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1575 The British pound was little changed at $1.3533 The Japanese yen was little changed at 159.61 per dollar Cryptocurrencies
Bitcoin rose 0.6% to $64,741.56 Ether rose 0.5% to $1,915.07 Bonds
The yield on 10-year Treasuries declined two basis points 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 $84.98 a barrel Spot gold fell 1.4% to $4,354.89 an ounce ©2026 Bloomberg L.P.
