Treasury Yield Rebound Knocks US Stocks Lower; Nasdaq Drops 1%

Major US stock indexes closed lower as long-term Treasury yields resumed their climb, sapping appetite for risk assets. Concerns over the US fiscal deficit, heavier Treasury supply, slowing consumer spending and higher oil prices tied to Middle East tensions also weighed on sentiment.

The Dow Jones Industrial Average fell 1.32% to 52,759.21 on Aug. 20. The S&P 500 dropped 0.87% to 7,641.16, while the Nasdaq Composite slid 1.00% to 26,067.17.

The rebound in Treasury yields led the market lower. Yields had briefly eased a day earlier after the US Treasury Department said it would expand long-term bond buybacks, but they turned higher again on Aug. 20.

The 30-year Treasury yield rose about 4 basis points from the previous session to 5.24%. The benchmark 10-year Treasury yield gained about 5 basis points to 4.70%.

Treasury Secretary Scott Bessent signaled that bond buybacks could be expanded further, but that did little to stop yields from rising. Investors pointed to structural drivers behind higher long-term yields, including the US fiscal deficit, increased Treasury issuance and large corporate fundraisings.

Worries about slowing consumption also pressured sentiment. Walmart, the largest US retailer, posted its weakest growth in second-quarter comparable US store sales in six years, and its shares tumbled 9.15%. Concerns also mounted that elevated oil prices are weighing on consumer spending.

Middle East geopolitical tensions also came back into focus. International oil prices rose more than 2% after the US signaled plans for broad economic pressure on Iran. Bessent said he would unveil the plan on Aug. 24.

Semiconductor shares were comparatively resilient. The Philadelphia Semiconductor Index rose 0.53% to 11,800.02, bucking the broader decline in the Nasdaq.

Micron rose 3.97% to close at $974.33, while US-listed American depositary receipts of SK Hynix gained 4.43% to $163.08. AMD and Broadcom added 0.65% and 0.43%, respectively. Nvidia and Intel fell 0.33% and 0.72%, respectively.