The Nasdaq 100 dropped more than 500 points on Tuesday, August 18, with semiconductor stocks leading a sell-off across Wall Street.

The decline unfolded as bond yields held at elevated levels. In the United States, the 30-year Treasury yield topped 5.33% on Tuesday, setting a new 19-year high — the highest level for long-dated American government borrowing costs since 2006.

The rise in long-term yields was not confined to the United States. Japan's 10-year government bond yield stood at its highest level in three decades, Germany's 30-year bond yield surged to its highest level since 2011, and France's 30-year yield climbed to its highest since 2008, leaving long-term borrowing costs elevated across major advanced economies at the same time.

The Nasdaq 100 tracks the 100 largest non-financial companies listed on the Nasdaq stock exchange by market capitalization, and it is heavily weighted toward technology firms, including major semiconductor manufacturers. As a market-cap-weighted index, its largest constituents exert the greatest influence on its point moves, which is why weakness concentrated in large chipmakers can translate into outsized declines for the index as a whole. Bond yields rise as bond prices fall, and the 30-year US Treasury yield is a widely followed benchmark for long-term American government borrowing costs.

Investors track moves in long-term yields closely because elevated yields lift the returns available on risk-free government debt and feed into the discount rates used to value companies' future earnings — a dynamic watched most closely in growth-heavy sectors such as semiconductors, where valuations rest on profits expected years into the future.

Reported by Hormaz Fatakia for CNBC-TV18 Markets (@hormaz_fatakia). Original coverage: CNBC-TV18