Stocks and oil are rebounding as Bitcoin holds steady above $70k amid Trump-Iran beef

Software stocks were among the weakest parts of the market again on Tuesday as selling picked back up across the group. The iShares Expanded Tech-Software Sector ETF fell more than 3%, leaving it trading around levels last seen at the close on Feb. 25.

The damage has been building for a while. The ETF is now down 23% in 2026 as investors keep worrying that artificial intelligence could shake up the business models that many software companies rely on.

That pressure showed up in some of the biggest names in the space.

Salesforce dropped more than 5%, while ServiceNow fell more than 4%. The moves showed that this was not just a one-stock problem. Traders were still pulling money out of software more broadly as doubts around the group stayed front and center.

At the same time, the Treasury market also came under pressure. The 2-year Treasury yield jumped after what BMO described as a weak auction, with less bidding from non-dealers than usual.

That is the kind of result that can quickly push yields higher when demand does not come in strong enough.

The 2-year yield was last up more than 11 basis points at 3.944%. The 10-year Treasury yield also moved sharply higher, rising more than 8 basis points to 4.42%.

Circle got hammered after the latest draft of the Clarity Act raised fresh worries about how stablecoin issuers would be allowed to reward users.

The stock was last down 19%, which put it on track for its worst day ever. Its previous biggest one-day drop came on June 27, when the shares fell 15.5%.

The sell-off also hit Coinbase, which plays a central role in distributing USDC. Its shares were last down 9%. Investors clearly saw the bill as a direct threat to one of the biggest reasons people keep money in dollar-backed tokens.

That issue is yield. For many users, the appeal of holding stablecoins such as USDC is simple: they can earn rewards on those balances, much like earning interest on cash held in a bank account.

The latest version of the bill would block issuers from paying users yield just for holding the coins.

The draft still leaves room for activity-based rewards. That means users could still get incentives tied to actually doing something with the token, such as using it for payments, trading, or lending.

This debate has been building for a while across the crypto industry.

Banks have argued that if crypto platforms such as Coinbase can offer returns on stablecoin balances, customers may pull cash out of traditional bank accounts and move it into digital dollars instead.

There was also another big stablecoin development in the market. Tether, which competes with Circle, said it has hired a Big Four accounting firm to carry out the first full audit of USDT reserves. The company did not name the firm.

USDT remains the largest stablecoin in the market, with a $184 billion market cap, based on CryptoQuant data. But the token has been under scrutiny for years.

Tether has long promised transparency through quarterly attestations, yet it has never delivered a full formal audit.

U.S. stocks slipped on Tuesday after Monday’s strong rebound lost steam. The S&P 500 fell 0.37% to 6,556.37.

The Dow Jones Industrial Average dropped 84.41 points, or 0.18%, to 46,124.06. The Nasdaq Composite fell harder than the other major indexes, losing 0.84% to close at 21,761.89.

A big part of the pressure came from oil, which turned higher again after Monday’s drop. Brent crude rose 4.55% to settle at $104.49 a barrel.

West Texas Intermediate climbed 4.79% to $92.35. With the Iran war moving deeper into its fourth week, traders were still pricing in the risk of a longer shock to energy markets.

That move helped push energy stocks to the top of the S&P 500 on the day. The sector gained 2% during the session. For the month so far, it is up more than 9%. It is also the only S&P 500 sector still in positive territory over that stretch.

There was also a clear shift in who was buying and who was backing off. Ruta Prieskienyte of VandaTrack said Monday was an inflection point for retail investors.

Ruta said everyday traders were net sellers of more than $20 million in single stocks on Monday. It was the first day of net selling since November 2023.

Ruta also said this fits a broader pattern that has been building since the U.S.-Iran conflict began.

In her Tuesday note, she said retail activity has been fading since the start of March, while markets also saw systematic deleveraging and only modest buying from long-only investors and hedge funds.

Japan’s bond market got a bit of breathing room after the latest debt auction went through without trouble, helped by signs that Middle East tensions might not keep getting worse from here.

Japanese government bonds kept their gains after Tuesday’s sale, which came in with a bid-to-cover ratio of 2.54, right in line with the 12-month average.

This was also the last auction of that maturity before the new financial year begins. That matters because Japan’s finance ministry is preparing to cut issuance of super-long debt once the new year starts, which has given the market another reason to pay close attention to supply.

Higher yields also helped draw buyers in. The yield on 40-year Japanese debt was hovering around 3.75%, still close to the record high hit in January. That kind of level made the bonds look more attractive to buyers who had been waiting for better entry points.

There was already some evidence of that demand showing up. Data from an industry body showed that Japanese financial institutions acting for pension funds bought the largest amount of the country’s super-long government bonds in more than two years last month.

Even with that support, traders have stayed nervous because the jump in energy prices since the war began has kept rate-hike expectations alive.

That is a big part of why bond investors are still on edge. Higher energy costs can feed into inflation, and that keeps pressure on the Bank of Japan.

Bank of Japan Governor Kazuo Ueda left the door open last week to a possible April rate increase at the central bank’s policy meeting.

U.S. stock futures moved lower early Tuesday after Wall Street posted its strongest session since early February, as traders weighed hopes that the U.S.-Iran conflict may be heading toward some kind of resolution. S&P 500 futures fell 0.66%, Nasdaq 100 futures lost 0.73%, and Dow futures dropped 299 points, or 0.64%.

That came after a strong Monday session, when the S&P 500 rose 1.15%, the Nasdaq gained 1.38%, and the Dow jumped 631 points, also 1.38%. At their highest levels of the day, all three indexes were up more than 2%.

The Dow was ahead by more than 1,100 points, or 2.5%, while the Nasdaq was up 2.5% and the S&P 500 climbed 2.2%.

Outside stocks, Bitcoin held above $70,000 after dropping below $68,000 the previous day. Oil also bounced in Asia trading after a steep overnight sell-off tied to the Middle East conflict.

Brent crude for May rose more than 3% to $102.96 a barrel, while West Texas Intermediate for May climbed 3.6% to $91.27. That followed Monday’s sharp drop, when Brent slid about 11% to around $99 after rising above $112 on Friday.

In metals, spot gold fell 1.5% to $4,342.80 an ounce, while silver dropped 3.5% to $66.68. Platinum and palladium also moved lower. US dollar’s DXY Index rose 0.3% after ending the previous session down 0.4%.