Surging Bond Yields and Geopolitical Instability Keep Tech Stocks Weak

The U.S. 30-year Treasury yield broke above 5.33% overnight, triggering a sharp sell-off in major big tech stocks. Concerns that high interest rates could persist for a long time hit growth-focused tech stocks especially hard.

BOA positively assessed Nvidia's growth potential from the expansion of the AI ecosystem. Even so, Nvidia's share price weakened amid the broader burden of high interest rates and tech sector weakness.

Former U.S. President Donald Trump officially stated that there are no ongoing or scheduled talks with Iran. The remark further heightened tensions in the Middle East and is adding pressure on international oil prices. Concerns about long-term instability in the region have grown.

He also directly released a map image marking the waterway as new U.S. territory. The remark is deepening geopolitical risk in the Middle East. Heightened tension over the Strait of Hormuz, a core chokepoint of global crude oil supply, has added uncertainty to energy markets.

The decline is mainly attributed to lower international oil prices. The drop in import prices can be read as a positive sign for easing inflation pressure, but it has been insufficient to offset the overall high-rate environment.

This was the lowest level since January, indicating that the housing market downturn is persisting. High rates are dampening home-buying sentiment and reducing transaction volume.

Rising bond yields accelerated as concerns over fiscal deficits in various countries combined with a shock from high oil prices. As a result, investor sentiment toward tech stocks broadly, including semiconductor stocks, has weakened and is weighing on the market.

Yardeni Research's Ed Yardeni drew a line, saying that despite the surge in 30-year yields, stocks are not in a panic phase until the benchmark 10-year U.S. Treasury yield exceeds 5%. This appears intended to calm excessive market worries from a bond market expert. Citing past cases, he explained that the current rate increase is not abnormal and moved to defend investor sentiment.

Although Bank of America said concerns over expanded AI ecosystem investment are excessive, keeping Nvidia's target price at $350 and recommending 'Buy,' the market reaction was cold. Nvidia ultimately closed 2.3% lower. This appears to be the combined result of the high-rate environment and broad investor sentiment weakening across tech stocks.

UBS maintained a 'Buy' rating and a $162 target price on Micron, positively assessing its long-term growth potential, arguing that in the AI infrastructure era the value of memory could grow more than computing. However, as memory stocks had been strong recently, profit-taking sales emerged, and Micron plunged nearly 7%. Despite the positive news, short-term selling pressure was strong.

Meta fell more than 4% as legal risks over teen safety resurfaced. In addition to these regulatory risks, the market grew wary as financial uncertainty tied to AI investment also weighed. This shows how the legal and financial pressures facing big tech companies are affecting investor sentiment.

Apple rose about 1.4% after announcing a new fee structure to resolve its App Store regulatory dispute with the European Union. It revised the core technology fee to 5% and adjusted its alternative payment policies. Buying interest gathered as Apple's relatively lighter financial burden from AI investment compared with other big tech companies drew attention.

Home Depot reported Q2 revenue of $47.86 billion and adjusted EPS of $4.91, both beating market expectations. However, it kept its guidance unchanged for a second straight quarter and cited pressure from fuel and raw material costs and slowing demand for large remodeling projects, causing the stock to close 0.12% lower. The conservative outlook for the future appears to have outweighed the positive results.

Alibaba closed up about 3.6% on the day, showing that business expansion using AI technology can have a positive impact on corporate value.

It aims to supply volume to expand U.S. sales of its in-house developed epilepsy drug cenobamate. The contract amount equals 14.1% of last year's consolidated revenue, and cenobamate's U.S. sales already exceeded 40 billion won in the first half, continuing steady growth.

Sales in Europe surged 61%, and explosive growth continued in the U.S. and China, delivering results in line with market expectations. Gross margin rose to about 48%, but the increase in operating margin was relatively limited due to stronger global marketing spending and higher labor costs. The overseas market diversification strategy worked successfully and drove the earnings improvement.