Pre-Market Update: Stocks Fall as Rising Yields and Iran War Weigh on Tech

TLDR

• Nasdaq 100 futures dropped ~0.8%, S&P 500 fell 0.4%, Dow slipped 0.2% in pre-market trading Tuesday
• The 10-year Treasury yield climbed back above 4.6%, adding pressure on growth and AI stocks
• Oil prices fell after Trump paused a planned Iran attack, citing “serious negotiations” toward a deal
• Nvidia earnings due Wednesday are seen as a key test for the AI trade and broader market direction
• Fund managers flagged global semiconductors as the most crowded trade, per a BofA survey

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US stock futures fell Tuesday morning, extending losses from the previous session. Tech stocks led the decline, with Nasdaq 100 futures down around 0.8%. S&P 500 futures dropped 0.4% and Dow futures slipped 0.2%.

The 10-year Treasury yield climbed back above 4.6%, continuing to weigh on equities. Higher yields make borrowing more expensive and tend to reduce appetite for growth stocks, particularly in the tech sector.

Inflation fears are driving the yield move. Blockades in the Strait of Hormuz pushed oil prices higher in recent weeks, raising concerns about price pressures and whether the Federal Reserve may need to raise interest rates.

Wall Street is debating the Fed’s next move. Higher rates would be a headwind for AI and growth stocks, whose valuations depend heavily on future earnings expectations.

Iran Developments Offer Some Relief to Markets

President Trump said Monday that “serious negotiations” are underway with Iran and that there is a “very good chance” of a deal on its nuclear program. He also said he paused a planned military strike on Iran, at the request of Gulf allies.

That news pushed oil prices lower. Brent crude fell 1.4% to $110.43 a barrel. West Texas Intermediate dropped 0.7% to $103.67. Both benchmarks remain more than 50% above their pre-war levels.

Treasury yields also retreated slightly on the news. The two-year yield fell 1.8 basis points to 4.071%. The 10-year was down 1.4 basis points to 4.608%.

Analysts at ING noted that the oil market “remains extremely sensitive to Iran-related headlines” and continues to trade in wide ranges.

Bitcoin edged higher as oil prices and bond yields pulled back, according to early market reports.

All Eyes on Nvidia Wednesday

Nvidia earnings on Wednesday are the week’s main event. Investors expect strong numbers, but the company has already set a high bar with prior results.

With other major chip companies having already reported, Nvidia’s results could set the tone for AI stocks going into the summer. A Bank of America fund manager survey flagged global semiconductors as the most crowded trade right now.

Half of fund managers surveyed by BofA still expect the Fed to cut rates within the next 12 months. Investors are rotating into commodities, utilities, and emerging markets as tech uncertainty grows.

The dollar index fell 0.1% against a basket of currencies. Markets remain cautious ahead of Wednesday’s print.