Dow falls 320 points as rising bond yields pressure stocks

• The 10-year Treasury yield climbed to 4.687% (highest since January 2025) and the 30-year yield reached 5.198% (highest in nearly 19 years), pressuring equity valuations and raising expectations for potential Fed rate hikes.
• Markets now assign a 41.7% probability of a 25-basis-point rate increase by December as inflation pressures accelerate, with oil prices remaining elevated near $108 per barrel for WTI crude.
• Nvidia fell 0.77% ahead of its Wednesday earnings report, which investors view as a key indicator of sustained AI-driven demand for semiconductors, while the Philadelphia Semiconductor Index traded roughly flat after recovering from a 3% intraday decline.

Market Summary: Rising Bond Yields Pressure U.S. Equities

Market Performance:

U.S. stocks closed lower on Tuesday, May 19, 2026, extending losses to three consecutive sessions. The Dow Jones Industrial Average fell 321.81 points (-0.65%), the S&P 500 declined 0.67%, and the Nasdaq Composite dropped 0.84%.

Key Driver – Bond Yields:

Treasury yields surged to multi-year highs, pressuring equities as investors reassessed Federal Reserve policy expectations. The 10-year Treasury yield climbed to 4.687% (highest since January 2025), while the 30-year yield reached 5.198% (highest in nearly 19 years). Rising yields followed recent inflation reports showing accelerating price pressures amid elevated oil prices.

Fed Rate Expectations:

Markets are increasingly pricing in potential rate hikes. CME FedWatch data shows a 41.7% probability of a 25-basis-point increase by December, with odds of a 50-basis-point hike rising sharply from the previous week.

Geopolitical Concerns:

U.S.-Iran tensions remained a focal point. President Trump called off a planned military strike following regional leader requests, providing temporary relief. However, crude prices stayed elevated due to ongoing Middle East conflict risks and Strait of Hormuz shipping disruptions. WTI crude settled at $107.77 (-0.82%), while Brent crude fell to $111.37 (-0.65%). The U.S. later seized an Iranian-linked oil tanker in the Indian Ocean.

Semiconductor Sector:

Chip stocks traded mixed ahead of Nvidia's earnings report (due Wednesday after close). Nvidia fell 0.77%, while the Philadelphia Semiconductor Index recovered from a 3% intraday decline to close flat. Qualcomm dropped over 4%, Broadcom declined 2%, and Micron finished unchanged. Investors await Nvidia's results for insights into AI-driven demand sustainability.