U.S. stocks moved lower on Tuesday as another rise in crude oil prices and high Treasury yields revived concerns about inflation and borrowing costs. The Nasdaq Composite led the retreat, falling roughly 1.3%, while the S&P 500 dropped 0.6% and the Dow Jones Industrial Average declined about 0.2%.
Technology stocks absorbed the heaviest selling as investors pulled back from some of the market’s biggest AI and semiconductor winners. The PHLX Semiconductor Index tumbled more than 5% at one point, adding pressure to the Nasdaq as Nvidia, Broadcom, Taiwan Semiconductor, Micron, and Intel all moved sharply lower. Meanwhile, Brent crude approached $91 per barrel as stalled diplomacy surrounding the Strait of Hormuz kept energy supply risks firmly in focus.
Market Movers:
- Amylyx Pharmaceuticals (AMLX) +44%: Shares soared after the company’s Phase 3 LUCIDITY trial of avexitide met its primary and all secondary endpoints, with the treatment reducing Level 2 and Level 3 hypoglycemic events by 55% versus placebo. Amylyx plans to submit a New Drug Application by year-end, potentially positioning avexitide for a U.S. launch in 2027 if approved.
- Duos Technologies Group (DUOT) +21%: Shares jumped after the company delivered upbeat second-quarter results and reaffirmed its 2026 targets of 25 megawatts deployed and more than $50 million in revenue. Duos also highlighted a new $111 million, 10-megawatt agreement with an investment-grade hyperscaler, while adjusted EBITDA turned positive during the quarter.
- Flexsteel Industries (FLXS) +11%: Shares rallied after the furniture manufacturer beat fiscal fourth-quarter earnings and revenue estimates and delivered stronger-than-expected guidance for the new quarter. Flexsteel expects first-quarter revenue of $111 million to $115 million, above the $107.9 million consensus, while its $24.3 million in quarterly operating cash flow helped support an aggressive share-repurchase program.
- Klarna (KLAR) -21%: Shares plunged despite an upbeat second quarter after the fintech company issued disappointing third-quarter and full-year guidance amid weaker German volumes, foreign-exchange pressure, and accounting changes. Klarna now expects 2026 revenue of $4.08 billion to $4.16 billion versus the $4.42 billion consensus and lowered its full-year GMV outlook to between $149 billion and $151 billion.
- Fabrinet (FN) -18%: Shares sank even after the electronics manufacturer delivered a strong fiscal fourth-quarter beat and issued first-quarter guidance above Wall Street expectations. Revenue jumped more than 45% year over year to $1.32 billion, but the sell-off suggested investors were taking profits as broader weakness swept through semiconductor and AI-related stocks.
- Kulicke & Soffa (KLIC) -10%: Shares dropped after the semiconductor equipment company named Raj Talluri its new president and CEO, effective September 1, with interim CEO Lester Wong returning to his previous CFO role. The leadership transition arrived alongside a sharp industrywide semiconductor sell-off, adding to pressure on the stock.
- Baidu (BIDU) -9%: Shares declined after second-quarter revenue and adjusted earnings missed expectations, with total revenue falling 4% year over year and online marketing revenue dropping 19%. AI remained a bright spot as AI-powered revenue increased 25%, cloud infrastructure revenue climbed 50%, and GPU cloud revenue surged 283%, but those businesses have yet to fully offset deterioration in Baidu’s core advertising operation.
Oil Surge Renews Inflation Concerns
Oil returned to the center of the market narrative Tuesday as stalled negotiations over the Strait of Hormuz increased fears that disruptions to one of the world’s most important energy corridors could persist. Brent crude traded near $91 per barrel, while West Texas Intermediate climbed to around $84. The move comes as diplomatic tensions intensify between the U.S. and Iran, reducing optimism that normal shipping conditions will return soon.
The U.S. Strategic Petroleum Reserve has also fallen to its lowest level since 1982, potentially limiting one of the government’s traditional tools for cushioning the economy against a prolonged energy shock. For equity investors, the concern extends beyond energy costs themselves. Persistent strength in crude could filter into transportation, manufacturing, and consumer prices, threatening the recent improvement in inflation data and complicating the Federal Reserve’s ability to remain on hold.
Treasury Yields Hammer the AI Trade
The technology sector faced another challenge from elevated government bond yields. The 10-year Treasury yield remained around 4.70%, while the 30-year yield hovered near 5.30% after recently touching its highest level in 19 years. Rising government borrowing and the enormous amount of capital being raised to finance the AI infrastructure boom have contributed to pressure in global bond markets. Higher yields are particularly uncomfortable for richly valued growth stocks because they reduce the present value investors assign to profits expected far into the future.
Semiconductors bore the brunt of Tuesday’s reaction. The PHLX Semiconductor Index fell more than 5% at one point, with Nvidia, Taiwan Semiconductor, and Broadcom dropping more than 2%. Micron fell around 5%, while Intel, SanDisk, SK Hynix, Marvell, and Seagate were among the names suffering even steeper declines. The pullback comes after AI-related stocks produced some of the market’s strongest returns, leaving valuations increasingly sensitive to changes in interest rates. Continued upward pressure on yields could test investors’ willingness to keep paying premiums for companies tied to the massive AI infrastructure buildout.
Tariffs and Housing Add to the Market’s Worries
Trade policy is also returning to investors’ radar. New 50% tariffs targeting certain Canadian automobiles, dairy products, and alcoholic beverages are scheduled to take effect at midnight unless negotiations between the U.S. and Canada produce a last-minute agreement. The direct economic impact could be relatively contained, since the affected products represent only a portion of total Canadian imports.
But the negotiations could carry broader implications for the future of the U.S.-Mexico-Canada Agreement, making the outcome important for companies with highly integrated North American supply chains. Meanwhile, another warning sign emerged from the housing market. Pending home sales fell 2.3% in July from the previous month and 2.2% from a year earlier as mortgage rates climbed to their highest levels of 2026. With home prices still near records, elevated financing costs are making affordability an increasingly difficult hurdle for buyers.
Looking Ahead
Investors will remain focused on the intersection of oil prices, Treasury yields, and monetary policy as the week progresses. Wednesday’s release of the latest Federal Open Market Committee minutes could provide a clearer picture of how policymakers are balancing easing inflation and a weakening labor market against the risk that another energy shock reignites price pressures. Corporate earnings will also remain important, particularly as major retailers provide a closer look at consumer spending. With the Nasdaq under pressure and semiconductor stocks suddenly retreating, the market’s ability to regain momentum may depend on whether yields and crude prices stabilize — or continue challenging the assumptions that have supported stocks near record highs.