US stocks closed lower on Tuesday, August 19, 2026, as a broad selloff in chipmakers and AI-infrastructure stocks dragged the Nasdaq 100 down 1.68%, while rising crude oil prices stoked fresh inflation concerns. The S&P 500 fell 0.69%, and the Dow Jones Industrial Average slipped 0.22%, with both indexes settling at two-week lows.
The rout in semiconductor and AI-related names was the primary drag on the market. The iShares Semiconductor ETF (SOXX) dropped nearly 5%, with major players like Sandisk (SNDK) and Seagate Technology (STX) each falling more than 9%. Marvell Technology (MRVL), Western Digital (WDC), and Micron Technology (MU) all closed down over 7%, while ARM Holdings (ARM) and Intel (INTC) lost more than 6%.
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Oil Prices and Middle East Tensions Weigh on Sentiment
Compounding the tech-led weakness, WTI crude oil climbed to a three-week high after a vessel leaving the Strait of Hormuz was struck by an unknown projectile. The incident reinforced concerns that the US-Iran conflict could continue disrupting Middle East energy supplies. President Trump stated he has no interest in extending the expired agreement with Iran and provided no timeline for resolving the conflict, while Treasury Secretary Bessent signaled that unusual economic measures against Iran would be announced soon.
The jump in oil prices pushed inflation expectations higher, sending global bond yields to multi-year highs. The 10-year German Bund yield reached a 15-year high of 3.272%, and the 10-year T-note yield touched a 1.5-year peak of 4.75% before settling down 2 basis points at 4.70%. The 10-year Japan JGB yield also climbed to a 30-year high of 2.967%.
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Stocks did recover from their worst levels of the day as bond yields pulled back from those highs, offering some late-session relief.
Earnings Season Remains a Bright Spot
Despite the day’s losses, the broader earnings picture continues to support the market. The S&P 500 is tracking for Q2 earnings growth of nearly 32%, well above the 23% initially projected, according to Bloomberg Intelligence. AI infrastructure spending is expected to account for the bulk of that growth, contributing nearly 60% of the index’s earnings-per-share expansion. So far, 85% of the 456 S&P 500 companies that have reported have beaten analyst estimates.
Software stocks provided a rare bright spot on Tuesday. Intuit (INTU) rose more than 4% to lead Nasdaq 100 gainers, while Adobe (ADBE) gained over 3%. Autodesk (ADSK), Atlassian (TEAM), and Salesforce (CRM) each added more than 2%.
Mixed Economic Data and What to Watch
Tuesday’s economic data offered a mixed picture. July housing starts fell 12.4% month-over-month to 1.239 million, missing expectations, but building permits rose 5.0% to a five-month high of 1.443 million. The July import price index ex-petroleum came in hotter than expected at +0.3%, while pending home sales declined 2.3%.
Looking ahead, markets are pricing in a 35% chance of a 25-basis-point rate hike at the Federal Reserve’s next FOMC meeting on September 15-16. With the ECB also expected to raise rates by 25 basis points on September 10, traders will be closely watching central bank commentary and any developments in the Middle East for direction.
This article is for informational purposes only and does not constitute financial advice. Market conditions are volatile and uncertain; readers should conduct their own research before making investment decisions.
