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Stocks fell Tuesday and oil prices continued to climb following another round of U.S. military strikes on Iran, stoking worries about stubbornly high inflation.
The S&P 500 index fell 0.7%. The Dow Jones Industrial Average fell 456 points, or 0.9%, as of 1:26 p.m. Eastern time. The Nasdaq composite fell 1%.
The weak start to September follows a shaky but mostly positive month for Wall Street. Every major index notched monthly gains in August. The same worries continue to hang over Wall Street, though, including anxiety over rising prices, government debt, and the impact of global conflicts on the U.S. and the global economy.
Technology stocks were among the heaviest weights on the market. Microsoft fell 1.3% and Advanced Micro Devices fell 3%. Their big market values tend to give them more influence over the broader market’s direction and their growth amid the artificial-intelligence boom has been heavily reliant on borrowing, which becomes more expensive as interest rates rise.
Much of the continued pressure being felt by Wall Street is coming from an ongoing sell-off in U.S. government bonds. The yield on the 10-year Treasury, which tends to impact mortgage rates, rose to 4.79% from 4.75% late Monday. It was as low as 4.20% at the beginning of 2026
The yield on the 2-year Treasury, which closely tracks expectations for Federal Reserve moves on interest rates, rose to 4.38% from 4.34% late Monday. That’s up significantly from about 3.50% at the beginning of 2026.
Bond yields have an inverse relationship to prices, and yields rise as prices fall. Rising yields signal that investors are demanding a higher return from Treasurys because they are becoming riskier. Growing government debt is highlighting that risk.
The U.S. debt surpassed $40 trillion two weeks ago, a shocking milestone as defense costs and interest on the burgeoning deficit make up an enormous share of federal spending. The bond sell-off is global, with other nations facing the same economic pressures.
Higher yields on bonds signal higher borrowing costs on mortgages and a wide range of other loans. Higher borrowing costs tend to weigh down investments, including stocks, while making it more difficult for businesses to expand.
Oil prices have been behind much of the pressure on inflation, bond yields and the broader stock market. The price of Brent crude, the international standard, rose 3.9% to $94. Energy costs remain high and volatile amid the ongoing U.S. war with Iran, which has essentially shut down the Strait of Hormuz, through which 20% of the world’s oil is typically shipped.
