US stocks open lower as Iran stalemate lifts oil prices and Treasury yields

Morning trading on Wall Street slipped on Tuesday, as diminishing prospects for a peace deal between the U.S. And Iran kept oil prices elevated and government bond yields at multi-year peaks.

In New York, the Dow Jones Industrial Average fell 105.3 points, or 0.20 per cent, to 53,354.43. The S&P 500 fell 45.0 points, or 0.58 per cent, to 7,700.04, while the Nasdaq Composite dropped 298.0 points, or 1.12 per cent, to 26,346.88. In Toronto, the S&P/TSX composite index was down 88.28 points, or 0.24 per cent, at 36,579.64 at 9:41 a.m. ET with declines in technology shares offsetting energy gains.

"The yields are troubling people because it portends a tighter environment and it’s going to be more expensive to borrow money,"

Kim Forrest, chief investment officer at Bokeh Capital Partners

“Especially in this whole AI thing where time to pay it back is uncertain. It makes for a nervous investor environment.”

The yield on the 30-year Treasury bond stood at its highest since 2007, while that on the benchmark 10-year maturity held near its highest level since January 2025.

The developments pushed Brent crude futures up 0.3 per cent at around three-week highs. A senior Iranian official told Reuters that Iran would shift to a “fully offensive” military posture because efforts to negotiate a permanent end to the war with the U.S. Have stalled. Washington, too, has ruled out extending a temporary ceasefire agreement that expired on August 17.

The CBOE Volatility Index, commonly dubbed as Wall Street’s “fear gauge”, jumped to its highest in about two weeks. In currency trading early Tuesday, the U.S. Dollar rose to 159.68 Japanese yen from 159.46 yen. The euro cost US$1.1576, down from US$1.1583.

Strong earnings across several sectors, including some AI hyperscalers, had lifted the S&P 500 and the blue-chip Dow to all-time highs earlier this month. Masashi Akutsu and Tetsuhiro Tokuyama said in a recent report for BofA Securities:

“First, the beneficiary base from AI investment has broadened. Demand spread across a wide range of industries, including semiconductor production equipment, power equipment, machinery, electronic components, and materials. AI demand effectively helped rediscover globally competitive companies across these sectors,”

Masashi Akutsu and Tetsuhiro Tokuyama

Japan’s benchmark Nikkei 225 sank 2.5 per cent to finish at 67,460.73. South Korea’s Kospi lost 1.6 per cent to 6,869.83. Australia’s S&P/ASX 200 was little changed, inching down less than 0.1 per cent to 9,070.00. Hong Kong’s Hang Seng gained nearly 0.1 per cent to 25,471.15, while the Shanghai Composite added 0.2 per cent to 3,990.30.

Money-market data showed traders still see a 96 per cent chance of a 25-basis-points rate hike this year, though odds of an increase as soon as September have come down following tame inflation data last week.

Key numbers at a glance

Index	Point change	Percent change
Dow Jones Industrial Average	-105.3	-0.20 per cent
S&P 500	-45.0	-0.58 per cent
Nasdaq Composite	-298.0	-1.12 per cent
S&P/TSX composite	-88.28	-0.24 per cent

What to watch next

• Minutes from the Federal Reserve’s July meeting, due on Wednesday, could offer more clues about how the central bank is assessing the current environment.
• Retail bellwether Walmart is set to report on Thursday.
• The next test for the AI trade could be Nvidia’s earnings, due next week.
• The 60-day deadline for an agreement to end the Iran war and resolve the dispute over its nuclear program is expiring.