US Stocks Fall as Brent Nears $100, AI Disruption Hits Software

Dow Drops 628 Points as Oil Surge Revives Rate Fears

U.S. stocks closed lower Tuesday as rising oil prices and elevated Treasury yields intensified inflation and interest rate concerns, while a widening divide between AI winners and losers reshaped technology trading. The Dow Jones Industrial Average fell 628.18 points, or 1.18%, to 52,786.10; the S&P 500 dropped 45.11 points, or 0.58%, to 7,673.49; and the Nasdaq Composite declined 85.58 points, or 0.32%, to 26,421.40.

Oil supplied the day's clearest macro pressure. Brent crude climbed $2.10, or 2.18%, to $98.38 a barrel, after Iran backed Houthi attacks on Saudi energy facilities heightened concerns about a broader Middle East supply disruption, while tensions around the Strait of Hormuz remained elevated.

The resulting inflation risk matters because Treasury yields are already elevated. The 10-year yield hovered around 4.8% Tuesday, approaching levels that increase corporate financing costs and make bonds increasingly competitive with equities. The combination of expensive energy and high yields is especially problematic ahead of Friday's inflation data and next week's Federal Reserve decision.

Technology presented a more complicated picture. Software shares including Salesforce, ServiceNow and Intuit fell as OpenAI's newest model revived concerns that generative AI could compete directly with specialized software products. Semiconductor shares moved in the opposite direction.

Qualcomm jumped after announcing a multi generation custom chip partnership with Amazon. The agreement could involve as much as $60 billion of AI data-center chips and related products, while Amazon received warrants for 25 million Qualcomm shares at $161.26 apiece. The companies will also develop connectivity products for AI infrastructure.

This may help explain why the technology heavy Nasdaq lost only 0.32%, substantially outperforming the Dow's 1.18% decline: investors are increasingly distinguishing between companies threatened by AI disruption and those supplying the infrastructure behind it.

Apple added another focal point. Shares weakened ahead of Wednesday's iPhone event, which will be the first major product presentation under new CEO John Ternus. Expectations center on Apple's first foldable iPhone, but pricing may matter more than hardware as rising memory and component costs test margins. Apple's stock has also declined ahead of the event rather than rallying into it, potentially altering its familiar “sell the news” setup.

Meanwhile, gold dropped $63.10, or 1.41%, to $4,413.50, consistent with pressure from elevated yields, while the VIX rose only 0.17 point, or 1.11%, to 15.47. The relatively subdued volatility gauge suggested Tuesday's decline remained an orderly repricing rather than a broad flight from risk.

The next major test comes with Thursday and Friday's inflation reports. With oil approaching $100 and Treasury yields near multiyear highs, another strong inflation reading could strengthen expectations for tighter Fed policy, and further test whether AI-driven earnings optimism can continue offsetting the rising cost of capital.

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