U.S. indices extended their decline: The Nasdaq plunged 2.7%, and the fear index rose nearly 20%

U.S. stock indices extended their decline. Two hours after the market opened on July 23, the broad-market S&P 500 index was down 1.5%, while the blue-chip Dow Jones Industrial Average was losing about 1%.

The tech-heavy Nasdaq Composite was hit the hardest. It plummeted 2.7% under pressure from sharp declines in the shares of two tech giants—Tesla and Alphabet.

Tesla's stock price plummeted 13.8% following the release of its quarterly results. If this trend continues through the close of trading, the drop will mark the company's worst reaction to earnings reports since 2013, according to MarketWatch.

Alphabet's stock price fell 6.7%—also following the release of its financial report.

Amid the sell-off in Alphabet and Tesla, a popular exchange-traded fund focused on the stocks of the largest technology companies could post its sharpest decline since last April, MarketWatch notes. The Roundhill Magnificent Seven ETF fell 4.5%.

The CBOE Volatility Index, often referred to as Wall Street’s “fear gauge,” rose 19.6% and nearly reached the psychologically significant 20-point mark. Breaking through this level is considered a zone of heightened investor anxiety.

The rally in oil prices and the subsequent sharp rise in U.S. Treasury yields have heightened fears that the Fed may raise interest rates sooner than expected—perhaps as early as next week, MarketWatch explains. This has put further pressure on stock prices.

Brent crude oil futures jumped nearly 7% on July 23 and surpassed $100 per barrel for the first time since May. This came after the Tehran-backed Houthis in Yemen claimed to have attacked the Saudi tankers Encelia and Layla in the Red Sea. In doing so, they carried out their threat to strike any vessels traveling to or from Saudi Arabian ports. This escalation could put an end to the use of an important alternative route for oil exports—through the Bab el-Mandeb Strait.

In addition, the Houthi attack has heightened fears that the conflict in the Middle East could escalate, according to CNBC. President Donald Trump warned Iran that if there are any new attacks on Saudi ships, the U.S. will strike both the Houthis and the Islamic Republic. In an interview with Axios, he said he was prepared to ramp up the pressure: “I am considering a massive attack—larger than ever before. I am close to making a decision. We are all set.”

This news story is being updated.

This article was AI-translated and verified by a human editor