What moved
US stocks ended Tuesday broadly lower: the S&P 500 closed down 0.71% at 7,631.47, the Nasdaq Composite lost 1.03% and the Dow shed 0.79%. Futures have steadied rather than bounced — S&P 500 futures are 0.03% firmer, Nasdaq 100 futures 0.2% lower.
Asia took the brunt overnight. The Kospi ended 3.99% lower and the Nikkei 225 finished down 2.85%; the Shanghai Composite closed 0.97% weaker, while the Hang Seng was effectively flat, off 0.07%. Europe, mid-session, is far calmer: the FTSE 100 is down 0.3%, the DAX 0.43% and the CAC 40 0.12%, all trading above their morning lows.
Why
The tape is still being driven by the renewed fighting between the US and Iran, which has repriced energy and rates together. Brent is trading at $94.28, a shade lower on the day but up 5.11% over five sessions and 12.55% over the month; WTI is at $89.67. Dearer crude does two things at once — it lifts headline inflation and it taxes activity — which is why it has hit long-duration equities rather than the whole market evenly.
The rates leg matters more for the open. The 10-year Treasury yield sits at 4.778% after a week of grinding higher, and Federal Reserve chair Kevin Warsh's insistence that taming price pressures remains the central bank's chief focus has pushed markets to price a firmer policy path. When the risk-free yield rises, the distant cash flows that justify high-multiple technology valuations are discounted harder — hence Tuesday's 1.53% fall in the technology sector against a 1.27% gain in energy.
That framework explains Asia's overnight rout better than anything domestic: Korea and Taiwan are the most concentrated semiconductor markets in the world and carry the largest year-to-date gains, so they de-rate fastest when the discount rate moves. This morning's ADP miss has taken a little of the pressure off, with the 10-year easing 1.8 basis points.
Sentiment & risk appetite
This is a de-risking, not a panic. The VIX is at 16.20, down 0.86% this morning but 11.65% higher over five sessions, and the MOVE index of rates volatility closed 3.39% higher at 77.88 — the anxiety is being expressed in bonds, not equities. Breadth is the weak spot: across PrimerIQ's US universe, 4,073 of 6,048 listings fell on Tuesday against 1,769 risers, a 0.43 advance-decline ratio, with our median technology name down 2.36% and the median energy name up 1.19%. Gold at $4,379.40 is 0.72% firmer and the dollar index is up 0.11% at 99.78, a mildly defensive combination that also squeezes dollar-borrowing emerging markets. Bitcoin, down 0.90%, is behaving like a risk asset again.
Economic calendar
The pre-open print came at 08:15 ET: ADP put private-sector employment growth at 38,000 in August, below the roughly 48,000 expected and after an upwardly revised 46,000 in July — the slowest pace since January. Base pay rose 3.2% year on year, gross pay 4.7%. Education and health services did the heavy lifting; professional and business services shed jobs. It is a labour market cooling gently rather than cracking, but it sharpens the tension with a Fed publicly focused on inflation.
July factory orders follow at 10:00 ET, and the Federal Reserve's Beige Book lands this afternoon — worth reading for how firms describe pass-through from higher energy costs. Friday's August employment report is the week's real event.
Earnings
Brown-Forman reported before the bell: first-quarter net sales fell 1% to $911m, diluted earnings per share rose 6% to $0.38 and the full-year outlook was reaffirmed — a quarter management described as broadly in line. The bigger overnight news was Dell, which beat and raised its profit and revenue forecasts on AI server demand and is indicated sharply higher. Tuesday's results were less kind elsewhere: Credo Technology fell 8.65% and Axon Enterprise 8.52%.