Stocks fell as rising yields pressured tech: Tuesday recap

September opened in the red on Wall Street. The S&P 500 fell 0.7% to 7,631.47. The Dow Jones Industrial Average slipped 0.7% to 52,766.88. The Nasdaq Composite took the hardest hit, down 1.3% to 26,099.77, as the technology-heavy gauge bore the brunt of the day’s selling. Losses reached most corners of the market. Two areas held their ground.

Energy led again. The sector rose 1.3%, the strongest group on the board for a second straight session. The defensive corners firmed alongside it, with utilities up 0.8%, health care 0.7% and consumer staples 0.3%. The weakness sat in the growth-sensitive groups. Consumer discretionary fell the most, off 1.7%, with technology lower by 1.5% and industrials down 1.4%. Materials and real estate also declined, financials gave back nearly a percent, and communication services eased about half that. The gap between energy at the top and consumer discretionary at the bottom ran about three points, the shape of a rotation toward safety rather than an across-the-board rout.

The move traced to the bond market. Longer-dated Treasury yields pushed higher, with the 10-year at 4.73%, part of a broader selloff in government debt that spread across major markets as inflation worries resurfaced. Rising yields fall hardest on the highest-valued technology shares, whose worth leans on profits far in the future, and that pressure showed in the Nasdaq’s underperformance. Crude oil added to the strain. Prices climbed as tensions in the Middle East escalated, extending a run that has lifted energy producers while stirring fresh concern about inflation working its way through the economy. With both forces in play, futures markets moved to price a greater chance that the Federal Reserve raises rates at its meeting this month.

The day’s economic data offered little to counter the mood. The Institute for Supply Management’s manufacturing index eased to 54.6% in August from 55.6% in July, still signaling expansion but at a slower pace, while a separate reading showed job openings holding firm. Neither print changed the market’s focus, which stayed fixed on yields and the barrel.

Breadth confirmed the tone. The Russell 2000 tracker of smaller companies fell 1.1%, trailing the large-cap averages as the more economically sensitive names gave way. The Cboe Volatility Index rose 9.5% to 16.34, its climb a sign of rising caution, though the level remains low by historical standards. A reading in the mid-teens points to a market that is wary without being fearful. The selling was orderly. Bonds, stocks and oil moved in step, the mark of a session driven by macro forces.

The week ahead carries weight. September brings a full slate of economic releases, with the monthly employment report the marquee item for a market still gauging the Fed’s next step. Investors will also watch the oil market and any further developments in the Middle East, where the size of the next move depends on headlines that arrive without warning. The reaction so far has stayed measured. Whether it holds is the question the coming sessions will answer.

This is a general-market summary for information only — not investment advice, and not a recommendation regarding any security.