Stock Market Slumps as Oil Prices and Interest Rates Weigh on Tech

The stock market is experiencing a dip due to concerns over rising oil prices and high interest rates. The S&P 500 fell 0.5% on Tuesday, marking its third straight modest loss since setting an all-time high on Thursday. Leading the decline were AI stocks, including Micron Technology, which dropped 7%, and Nvidia and Broadcom, both down 2.4% and 2.9%, respectively.

High oil prices are pushing up inflation and putting pressure on central banks to hike interest rates, causing bond yields to remain high. The yield on the 10-year U.S. Treasury edged down to 4.71% from 4.72% late Monday but remains well above its pre-war level of 3.97%. The 30-year Treasury yield also ticked lower but is near its highest level since 2007.

The bond market's influence on the stock market cannot be overstated, as high yields make investors less willing to pay high prices for stocks and other investments. This has already affected the housing industry, with homebuilders breaking ground on fewer new houses last month than expected. The average long-term U.S. mortgage rate is near its highest level in a year.