U.S. stocks tumbled on Tuesday, extending a three-day market slide as fresh military strikes on Iran propelled oil prices higher and deepened a global sell-off in government bonds, according to reporting by the Associated Press.
The Standard & Poor’s 500 index fell 0.7% to close at 7,631.47, losing 54.67 points. The Dow Jones Industrial Average dropped 419.02 points, or 0.8%, to finish at 52,766.88. The Nasdaq composite slid 1% to end the session at 26,099.77. The losses mark a weak start to September following a mostly positive month in August across Wall Street.
Oil Prices Surge Amid Strait of Hormuz Disruptions
Energy markets drove much of the downward pressure on stocks as conflict in the Middle East intensified. According to the Associated Press, the price of Brent crude rose 4.6% to settle at $94.65 per barrel. U.S. oil climbed 5.2% to settle at $90.22 per barrel, marking the first time it has closed above $90 in over a month.
The surging energy costs stem from ongoing U.S. war with Iran, which has effectively shut down the Strait of Hormuz. Approximately 20% of the world’s oil is typically shipped through the vital waterway. The resulting supply constraints have pushed up prices for gasoline and shipped goods, fueling persistent inflation that remains well above the Federal Reserve’s 2% target.
Bond Market Sell-Off and Rising Yields
Compounding the pressure on equities, an ongoing sell-off in U.S. government debt pushed bond yields higher. According to financial market data cited by the Associated Press, the yield on the 10-year Treasury rose to 4.79% from 4.75% late Monday, having been as low as 4.20% at the beginning of 2026. The 2-year Treasury yield, which tracks short-term interest rate expectations, climbed to 4.39% from 4.34%.
Rising yields reflect falling bond prices as investors demand higher returns to offset perceived risk. Growing government debt is highlighting this risk. Total U.S. national debt surpassed $40 trillion two weeks ago, a milestone driven heavily by mounting defense costs and interest payments on the federal deficit.
Higher bond yields directly increase borrowing costs for mortgages and business loans, making corporate expansion more expensive and weighing heavily on equity valuations.
Technology Stocks Lead Market Decline
Growth-oriented technology shares absorbed some of the steepest losses during Tuesday’s session. Nvidia shares fell 1.5%, Amazon dropped 1.9%, and Advanced Micro Devices retreated 2.4%, according to market tallies. Because of their big market values, these companies exert significant influence over major indexes. Their heavy reliance on borrowing to fund artificial intelligence-related expansion makes them particularly vulnerable to rising interest rates.
Wall Street is increasingly pricing in a potential interest rate hike by the Federal Reserve before the end of the year. According to CME FedWatch data reported by the Associated Press, investors are betting on a 66% chance that the central bank will raise its benchmark interest rate at its upcoming September meeting.
The broader economic picture remains subject to incoming data. On Tuesday, the federal government reported a slight increase in U.S. job openings for July, while a comprehensive monthly employment report for August is scheduled for release on Friday.
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