MARKET SNAPSHOT

U.S. stocks fell as a worldwide bond selloff pushed long-term yields to their highest levels in years. Oil futures edged up as the market weighed conflicting reports of how much oil is getting through the Strait of Hormuz. Gold and silver futures fell. The U.S. dollar strengthened.

MARKET WRAPS EQUITIES

U.S. stocks fell as a worldwide bond selloff pushed long-term yields to their highest levels in years.

Chip stocks came under heavy pressure and the expiration of a U.S.-Iran ceasefire rekindled fears of renewed Middle East escalation.

The Dow Jones Industrial Average fell 0.2%. The S&P 500 lost 0.7%, while the Nasdaq Composite declined 1.3%.

The 30-year Treasury yield hit its highest level since 2007 early Tuesday. The bond selloff, analysts said, reflects a confluence of forces: inflation fears stoked by rising energy prices, growing government deficits and the artificial intelligence industry's voracious appetite for debt.

"The change this year has been the scale and maturity of AI-related corporate borrowing," Barclays said in a research note.

Big technology companies have been issuing vast quantities of long-dated bonds to fund data centers and chip purchases, putting them in direct competition with government borrowers for investor dollars. German and French long-dated yields hit their highest closing levels since 2011 and 2008, respectively, while Japanese yields approached all-time highs as Prime Minister Sanae Takaichi abandons years of fiscal restraint.

The 60-day U.S.-Iran truce expired Monday with little progress toward a permanent deal. President Trump said Tuesday that no talks with Iran are planned. He also posted an image of the Strait of Hormuz to Truth Social, labeling it "New U.S. Territory."

Markets in Asia ended mixed earlier Tuesday as the U.S.-Iran standoff showed no signs of thawing, stoking fears of a prolonged and widening conflict.

China's benchmark Shanghai Composite Index rose 0.2%, the Shenzhen Composite Index fell 0.5%, and the ChiNext Price Index declined 0.9%.

Hong Kong's Hang Seng Index edged up 0.1%.

Japan's Nikkei Stock Average dropped 2.5%.

South Korea's Kospi ended 1.6% lower, snapping a five-session winning streak.

Australia's S&P/ASX 200 Index ended flat.

New Zealand's S&P/NZX 50 Index rose 1.1%.

COMMODITIES

Oil futures edged up in cautious trading as the market weighed conflicting reports of how much oil is getting through the Strait of Hormuz.

"Extraordinary workarounds are compensating for a badly impaired shipping route," Siebert Financial's chief investment officer Mark Malek said in a note. "Alternative oil routes demonstrate impressive resilience, but resilience is not the same as excess capacity."

Tanker relays and pipelines can buy time but don't replace unrestricted access through the strait, he said. U.S. government figures suggest considerably more oil is escaping the region than vessel-tracking data would seem to indicate, Malek added.

"When the official number and the observable number disagree by this much, the observable number usually wins the argument eventually," he said.

WTI settled up 0.5% at $84.94 a barrel and Brent rose 0.2% to $91.02.

Gold and silver futures settled lower for the day, as bonds sold off and Treasury yields rose to multi-year highs.

As a longer-term war with Iran looms over the market, precious metals haven't been behaving as safe-haven assets, but that may be changing.

"Gold tends to benefit when policy signals become harder to interpret," said Michael Widmer of Bank of America in a note. Widmer also said demand has been resilient, although it'll take higher demand from ETFs to drive an upside price breakout.

Front-month gold fell 1.2% to $4,366/oz, while silver lost 3.3% to $63.941/oz.

TODAY'S TOP HEADLINES

U.S. Import Prices Fell in July

U.S. import prices decreased in July, driven by lower prices for fuel imports, according to data from the Bureau of Labor Statistics.

Overall import prices fell 0.4% in July following a downwardly revised 0.3% decline in June, the data showed. A consensus of economists polled by The Wall Street Journal had been projecting a 0.1% increase. Year-on-year prices were up 5.9%, the BLS said.

Import prices exclude duties, such as tariffs imposed on imports by the Trump administration, as well as transportation costs.

U.S. Housing Starts Dropped in July

Housing starts fell sharply below expectations in July as home-builder sentiment remained muted. Here are the main takeaways from the Commerce Department's report released Tuesday:

On Monday, data from The National Association of Home Builders' showed builder sentiment remains weak as high mortgage rates, rising construction costs and economic uncertainty keep affordability concerns top of mind in the housing market.

Disney Sues FCC Over License Review, Says Government Trying to Quash Free Speech

Walt Disney's ABC has sued the Federal Communications Commission alleging the agency's efforts to challenge its broadcast licenses and regulate its talk show "The View" are illegal and an effort to quash speech the Trump administration finds objectionable.

In a suit filed in federal court in Washington, D.C., on Tuesday, ABC said, "Again and again, the Administration has attacked ABC's speech-the stories its journalists report and the viewpoints its network programs air. Over time, those attacks have escalated into express demands that ABC be stripped of its broadcast licenses because of its speech."

ABC is asking the court for a temporary restraining order, preliminary injunction to halt the FCC's license-renewal process, and a hearing from the D.C. Circuit Court.

Pivotal Child Safety Trial That Could Change Instagram Starts in California

OAKLAND, Calif.-Opening arguments in a child safety trial against Meta Platforms began Tuesday in what could be the most consequential social media harm case yet.

The case, brought by the state attorneys general of California, Kentucky, Colorado and New Jersey, will explore whether Meta violated state consumer protection laws and the federal Children's Online Privacy Protection Act of 1998, commonly known as COPPA, by knowingly making its platforms addictive and going after young users.

The trial, taking place at a federal courthouse in Oakland, Calif., comes on the heels of Meta's nearly $1 billion loss in New Mexico state court and could cost the tech company 200 times as much money if it loses, according to a recent filing.

Apple to Change Terms for App Developers to Appease EU's Antitrust Officials

Apple plans to change its terms for app developers in the European Union, seeking an end to a yearslong antitrust dispute over how the tech company manages its devices and App Store that included a 500 million-euro ($579 million) fine.

The U.S. company said changes include placing developers under a single set of business terms and adjust its commission fees. Apple also said it would put in place additional protections for younger users, including by not allowing apps to link away from the app store for payments if a user is under 13.

"These changes resolve Apple's disagreements with the Commission over business terms and alternative distribution," Apple said Tuesday.

Klarna Shares Tumble on Lower Outlook, CFO Search

Klarna cut its outlook for a key metric as it expects softness in consumer spending to continue, particularly in Germany, its largest market by volume.

The payments company also said it is searching for a new finance chief, with Niclas Neglén planning to step down from the role early next year.

Shares tumbled 21% to $15.41 Tuesday, extending their roughly 46% decline year to date.

Expected Major Events for Wednesday 01:00/AUS: Jul Vacancy Report

01:30/AUS: 2Q Wage Price Index

03:00/SKA: KDI Economic Outlook Update

06:30/INA: Aug Bank Indonesia Board of Governors meeting and decision

09:59/CHN: Jul FDI Foreign Direct Investment

23:50/JPN: Jul Provisional Trade Statistics for the Month

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