Nasdaq Futures Plunge as Rising Bond Yields Drive Chip Selloff

September Nasdaq 100 E-Mini futures (NQU26) are down -1.21% this morning as a global bond rout sapped investors’ appetite for risk, triggering a selloff in chip and other AI-related stocks.

Chip and AI infrastructure stocks were among the biggest losers in pre-market trading. Sandisk (SNDK), Micron Technology (MU), and Intel (INTC) each fell more than -5%. Higher bond yields create a particularly challenging backdrop for richly valued chip and other AI-related stocks because they raise the discount rate applied to future earnings, reducing the present value of their profits and putting pressure on valuations. 

The price of WTI crude edged higher on Tuesday as the U.S.-Iran standoff showed no signs of easing, fueling fears of a prolonged and widening conflict.

Investors are now awaiting a flurry of U.S. economic data.

In yesterday’s trading session, Wall Street’s main stock indexes ended in the red. Most members of the Magnificent Seven fell, with Meta Platforms (META) and Microsoft (MSFT) sliding over -3%. Also, software stocks slid, with Thomson Reuters Corp. (TRI) falling over -4% to lead losers in the Nasdaq 100 and Adobe (ADBE) dropping more than -3%. In addition, EyePoint (EYPT) plummeted over -66% after the company said a late-stage trial of its treatment for wet age-related macular degeneration did not meet its primary endpoint. On the bullish side, chip and AI infrastructure stocks climbed after Bloomberg reported that Anthropic’s Q2 revenue jumped at least 14-fold from a year earlier, with Sandisk (SNDK) surging over +8% to lead gainers in the S&P 500 and Nasdaq 100 and Marvell Technology (MRVL) rising more than +5%.

“The situation in the Middle East is unsettling, and the yield on the U.S. 10-year note has pushed back above 4.7%. In fact, with long-term yields remaining elevated even after last week’s benign inflation data, it is something that is creating some headwinds for investors,” said Matt Maley at Miller Tabak + Co.

Economic data released on Monday showed that the U.S. August Empire State manufacturing index jumped to 20.6, marking its highest reading since November 2021 and coming in above expectations of 10.6.

Meanwhile, U.S. rate futures have priced in a 65.4% probability of no rate change and a 34.6% chance of a 25-basis-point rate hike at September’s monetary policy meeting.

Today, investors will focus on U.S. Industrial Production and Manufacturing Production data, set to be released in a couple of hours. Economists project industrial production to rise +0.3% m/m and manufacturing production to rise +0.2% m/m in July, compared with the June figures of +0.1% m/m and unchanged m/m, respectively.

U.S. Building Permits (preliminary) and Housing Starts data will also be released today. Economists expect July building permits to be 1.370 million and housing starts to be 1.340 million, compared with the prior month’s figures of 1.374 million and 1.427 million, respectively.

The National Association of Realtors’ Pending Home Sales data will come in today. Economists expect pending home sales to rise +0.1% m/m in July, following a -5.4% m/m drop in June.

The U.S. Import and Export Price Indexes will be released today as well. Economists forecast the import price index to rise +0.1% m/m and the export price index to rise +0.2% m/m in July, compared with the previous month’s figures of +0.3% m/m and -0.6% m/m, respectively.

On the earnings front, home-improvement retailer The Home Depot (HD), test-equipment maker Keysight Technologies (KEYS), and luxury home builder Toll Brothers (TOL) are set to report their quarterly results today.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.73%, up +0.17%.

The Euro Stoxx 50 Index is down -0.64% this morning, extending its retreat from a record high as an intensifying global bond selloff soured investors’ risk appetite. Technology stocks led the declines on Tuesday as a surge in global borrowing costs weighed on the sector. Eurozone bond yields climbed to multi-year highs on Tuesday, joining the global bond selloff as stalled efforts to resolve the Middle East conflict pushed oil prices higher and fueled concerns about a prolonged period of elevated inflation. Mining stocks also sank, tracking a drop in gold prices as higher Treasury yields and oil prices reduced demand for the precious metal. Meanwhile, the ZEW Economic Research Institute said on Tuesday that sentiment among German investors improved again in August, supported by a strong earnings season and signs that the economy is moving past some of the shock from the Middle East conflict. Separately, the Office for National Statistics said the U.K. unemployment rate was unchanged in the three months through June, while wage growth picked up slightly, a combination unlikely to alter expectations that the Bank of England will keep interest rates unchanged next month. “The labor market picture is little changed overall, with some softening still evident,” according to ONS Director of Economic Statistics Liz McKeown. In corporate news, Huber + Suhner AG (HUBN.Z.EB) dropped over -4% after the optical connectivity products maker reported weaker-than-expected core profit and orders in its communications unit.

U.K. Average Earnings ex Bonus, U.K. Unemployment Rate, Germany’s ZEW Economic Sentiment Index, and Eurozone’s ZEW Economic Sentiment Index were released today.

U.K. Average Earnings ex Bonus rose +3.5% in the three months to June, stronger than expectations of +3.4%.

The U.K. Unemployment Rate was 4.9% in the three months to June, weaker than expectations of 4.8%.

The German August ZEW Economic Sentiment Index came in at 34.2, stronger than expectations of 30.1.

The Eurozone August ZEW Economic Sentiment Index arrived at 31.4, stronger than expectations of 25.9.

Asian stock markets today closed mixed. China’s Shanghai Composite Index (SHCOMP) closed up +0.19%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -2.54%.

China’s Shanghai Composite Index closed slightly higher today as gains in energy stocks helped offset weakness in AI stocks. Energy and coal stocks climbed on Tuesday as fading hopes for a quick end to the U.S.-Iran war pushed oil prices higher. Robotics stocks also advanced ahead of humanoid-robot maker Unitree’s market debut on Wednesday. In addition, consumer stocks gained as weak July economic data from the country fueled expectations of additional government stimulus measures. Data released after the market closed on Monday showed that China’s economic activity weakened across the board in July, with fixed-asset investment, industrial production, and retail sales all missing expectations. Macquarie Group’s Larry Hu said the July data indicate that monthly GDP growth is running at around 4.2% year over year, below the official 4.5%-5% target range for 2026. Economists expect Beijing to step up fiscal support in the second half of the year, helping to keep economic growth broadly in line with the official target range. Meanwhile, the benchmark index’s gains were limited as AI stocks slumped, following a selloff in their regional counterparts. In corporate news, Shanghai Chicmax Cosmetic tanked over -22% in Hong Kong after issuing a profit warning. Investor attention now turns to the People’s Bank of China, which is set to announce the country’s benchmark lending rates later this week. Economists expect the one-year loan prime rate to stay unchanged at 3.00% and the five-year LPR at 3.50%.

Japan’s Nikkei 225 Stock Index closed sharply lower today, snapping a five-session winning streak amid a broad selloff in tech shares. Chip and other AI-related stocks sank on Tuesday. Chip-making equipment maker Tokyo Electron slid over -6% and chip-testing equipment maker Advantest fell more than -5%, weighing heavily on the benchmark index. Sentiment worsened as a global bond selloff intensified, with the 30-year U.S. Treasury yield climbing to its highest level since June 2007 on Tuesday amid worries over U.S. government spending and stalled efforts to resolve the Middle East conflict, which have kept oil prices elevated. Japanese government bonds tracked losses in Treasuries on Tuesday, with the benchmark 10-year JGB yield rising to a three-decade high. However, the 10-year JGB yield pulled back from the day’s high after Japan’s five-year government bond auction drew the strongest demand since June 2025. “Rising interest rates tend to highlight the relative overvaluation of share prices,” said Wataru Akiyama at Nomura Securities. Investor focus this week is on Japan’s July National Core CPI, which is expected to show a modest pickup—a result that would keep the Bank of Japan on course to raise rates as soon as next month. Market participants will also keep a close eye on Japan’s July flash PMIs, July trade data, and June core machinery orders. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +3.53% to 30.51.

Pre-Market U.S. Stock Movers

Chip and AI infrastructure stocks slumped in pre-market trading. Sandisk (SNDK), Micron Technology (MU), and Intel (INTC) each fell more than -5%.

Most members of the Magnificent Seven slipped in pre-market trading, with Nvidia (NVDA) and Tesla (TSLA) dropping over -1%.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Tuesday - August 18th

The Home Depot (HD), Keysight Technologies (KEYS), Amer Sports (AS), Toll Brothers (TOL), Jack Henry & Associates (JKHY), Klarna Group (KLAR), Mercury Systems (MRCY), Pony AI (PONY), La-Z-Boy (LZB).