US stocks experienced significant pressure on Tuesday as a broad sell-off in government bonds created ripple effects throughout equity markets.
The S&P 500 declined 0.9% in early trading following the Labor Day weekend, while the technology-heavy Nasdaq Composite suffered a steeper 1.1% drop, reflecting investor concerns about rising interest rates and their impact on growth stocks.
The market weakness extended beyond American borders, with European indices facing similar headwinds.
The Stoxx Europe 600 fell 1.1% while Germany’s DAX experienced a more pronounced 1.7% decline, demonstrating how interconnected global financial markets have become in responding to bond market stress.
Rising US Treasury yields served as the primary catalyst for the equity market decline, with the 10-year US Treasury yield advancing 0.04 points to reach 4.27%.
Marija Veitmane, head of equity research at State Street Global Markets, explained, “The risk-off sentiment today reflects broader market unease stemming from the bond market,” highlighting how debt concerns in major economies are influencing investor behavior.
Technology stocks, which have been the primary drivers of US market gains throughout 2025, faced particular scrutiny from investors.
Nvidia, representing 8% of the S&P 500’s total value, dropped 2% on Tuesday following last week’s 3.8% decline after the company’s revenue forecast fell short of market expectations.
Political uncertainty surrounding Federal Reserve independence has intensified market volatility, particularly President Trump’s attempt to remove Governor Lisa Cook.
This development has contributed to investor flight toward safe-haven assets, with gold prices reaching record highs as market participants seek alternatives to traditional equity investments.
European bond markets experienced similar stress, with Germany’s 10-year yield climbing to 2.79% and the 30-year yield reaching its highest level since 2011.
Emmanuel Cau, head of European equities strategy at Barclays, noted that stock moves were “largely due to bond market spillover, with concerns about deficits and sticky inflation resurfacing,” after Eurozone inflation data exceeded analyst expectations.
