At 2:25 p.m. ET (1825 GMT) the Dow Jones Industrial Average .DJI fell 78.47 points, or 0.15%, to 53,381.31, the S&P 500 .SPX lost 43.24 points, or 0.56%, to 7,701.82 and the Nasdaq Composite .IXIC lost 324.44 points, or 1.22%, to 26,322.07.
The yield on the 30-year Treasury bond US30YT=RR rose to its highest since 2007, while that on the benchmark 10-year maturity US10YT=RR hit its highest level since January 2025.
Chip stocks and sector rotation
The S&P 500 information technology sector .SPLRCT was the biggest drag on the S&P 500, among its 11 major sectors, and its biggest percentage loser with a nearly 2% decline. The S&P 500's biggest drag from an individual stock was from Nvidia NVDA.O, which fell more than 2%. Investors see Nvidia's upcoming quarterly report as the next big test for the AI-driven momentum.
Some of the hardest-hit stocks included data storage firms Sandisk SNDK.O, down 10%, and Western Digital WDC.O, which was down almost 8%. Memory chipmaker Micron Technology MU.O was the benchmark index's second biggest drag, falling almost 8% after rising almost 18% in the last five sessions. The Roundhill Memory ETF DRAM.K tumbled almost 9% after five straight sessions of gains.
Investors flocked to more defensive equity sectors such as healthcare .SPXHC, which was up 1.8%, and consumer staples .SPLRCS, which added 1.4%. Wall Street's fear gauge .VIX hit a more than two-week high and was last up 0.59 points at 15.78.
With support from rising oil prices, the S&P 500 energy sector .SPNY rose 1.7% and neared its all-time high, reached in March.
Tech selloff pulls indexes lower
The S&P 500 hit a two-week low on Tuesday and the Nasdaq Composite sank more than 1% with semiconductors leading declines in the heavyweight technology sector as multi-year peaks in bond yields fed concerns about borrowing costs.
The Philadelphia SE Semiconductor Index .SOX tumbled more than 5% as investors fled stocks that had rallied previously based on booming AI-related demand.
The increase in bond yields reduced how much investors were willing to pay for potential growth in technology profits and suggested the Federal Reserve "is probably in too easy a policy setting for the growth and inflation outlook," said Tony Welch, chief investment officer at SignatureFD.
"There's nothing that can crack a momentum rally quite like interest rates moving higher and you're getting evidence of that today," Welch said.
Other market moves and upcoming catalysts
By late afternoon Brent crude futures LCOc1 had pared most of their gains after hitting three-week highs but were still up 0.1%, after Iran threatened to shift to a "fully offensive" military posture and Washington ruled out extending a ceasefire deal.
Shares of home-improvement retailer Home Depot HD.N inched up 0.3% after beating second-quarter sales estimates.
Investors were waiting for results due later this week from other retailers including bellwether Walmart WMT.O. Minutes from the U.S. Federal Reserve's July meeting, due on Wednesday, could offer more clues about how the central bank is assessing the current environment.
Declining issues outnumbered advancers by a 1.74-to-1 ratio on the NYSE, where there were 133 new highs and 219 new lows. On the Nasdaq, 1,777 stocks rose and 2,918 fell as declining issues outnumbered advancers by a 1.64-to-1 ratio.
The S&P 500 posted 10 new 52-week highs and four new lows while the Nasdaq Composite recorded 65 new highs and 106 new lows.
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