By DAMIAN J. TROISE and ALEX VEIGA AP Business Writers
Stocks closed broadly lower Tuesday as another round of U.S. military strikes on Iran sent oil prices higher, stoking worries about stubbornly high inflation. A bond market sell-off deepened, putting more pressure on stocks.
The S&P 500 index fell 0.7%. The Dow Jones Industrial Average dropped 0.8%, and the Nasdaq composite slid 1%. The major indexes have lost ground three days in a row.
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. Nvidia fell 1.5%, Amazon dropped 1.9% and Advanced Micro Devices gave up 2.4%. 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 4.39% from 4.34% late Monday. That’s up significantly from about 3.50% at the beginning of 2026.
Bond yields, which have an inverse relationship to prices, rise as bond 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 4.6% to settle at $94.65. U.S. oil climbed 5.2% to settle at $90.22 per barrel — the first time it closed above $90 in more than a month.
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.
Higher oil prices have pushed up costs for everything from gasoline to shipped goods, fueling inflation that has been squeezing households and businesses.
Higher inflation has also been a problem for the Federal Reserve. The rate of inflation is well above 3%, and Wall Street expects the Fed to raise interest rates before the year is over in order to try to bring inflation down to its 2% target. Investors are betting on a 66% chance that the central bank will raise its benchmark interest rate at its upcoming September meeting, according to CME FedWatch.
The Fed will get more updates on inflation ahead of the meeting. Meanwhile, it is getting updates on the jobs market this week. On Tuesday, the government reported that U.S. job openings rose slightly in July. A broader monthly report for August will be released on Friday.
All told, the S&P 500 fell 54.67 points to 7,631.47. The Dow dropped 419.02 points to 52,766.88, and the Nasdaq fell 271.11 points to close at 26,099.77.
Markets in Europe fell and markets in Asia ended mixed.
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AP Business Writers, Elaine Kurtenbach, Michelle Chapman and Matt Ott contributed to this report.