U.S. stock markets declined Tuesday as trading resumed following a three-day holiday weekend, weighed down by renewed conflict in the Middle East and rising oil prices. The S&P 500 fell 0.6 percent, while the Dow Jones Industrial Average dropped 628 points, or 1.2 percent. The Nasdaq Composite also slipped 0.3 percent.

The declines came amid a surge in oil prices, with Brent crude briefly reaching $99.46 per barrel before settling near $97.92, up 0.9 percent. This marks a significant increase from roughly $72 per barrel in early July. The spike in prices is linked to intensified fighting involving Iran, which is disrupting global oil supplies and fueling concerns about inflation.

Higher fuel costs have exacerbated existing inflationary pressures across the U.S. economy, amplifying market anticipation ahead of a pair of key government reports scheduled for later this week. On Thursday, the U.S. Labor Department will release its wholesale inflation figures for August, with economists forecasting an acceleration to 5.4 percent from July’s 4.7 percent. On Friday, the consumer inflation report is expected to show a slight easing to 3.3 percent from 3.4 percent in July, though this remains well above the Federal Reserve’s 2 percent target.

These inflation figures will be closely watched as the Fed prepares to meet next week to determine its next move on interest rates. Historically, persistent inflation has prompted the central bank to raise rates to curb economic activity and ease price pressures. Current market bets, based on CME Group data, place nearly a 60 percent chance of an interest rate hike at the September 16 meeting.

However, President Donald Trump has advocated for lowering interest rates, arguing that reductions could stimulate economic growth. Meanwhile, Federal Reserve Chairman Kevin Warsh has signaled a more cautious communication strategy, aiming to limit market speculation on the Fed’s near-term policy intentions.

In bond markets, the yield on the 10-year Treasury note inched up to 4.79 percent, near its highest level since late 2023. Rising yields increase borrowing costs for companies and consumers, which can further pressure stock valuations.

Individual stocks contributed to market volatility. Shares of Novartis plunged nearly 14 percent after the Swiss pharmaceutical firm issued a disappointing update regarding a clinical trial for a treatment targeting myotonic dystrophy type 1, a neuromuscular condition. Conversely, Qualcomm shares rose 3.2 percent, supported by a new collaboration with Amazon on large-scale artificial intelligence data centers. The agreement also grants Amazon the option to acquire up to 25 million Qualcomm shares at $161.26 each.

International markets also showed mixed results. Japan’s Nikkei 225 fell 1.7 percent, hurt by losses among major exporters such as Toyota Motor and Panasonic Holdings. The Japanese yen strengthened against the U.S. dollar, diminishing the value of overseas revenue when converted back into yen, and speculation about a possible interest rate increase by the Bank of Japan added to the pressure. In China, the Hong Kong market closed down 0.4 percent, while Shanghai rose 0.2 percent after export data for August revealed a robust 25 percent year-over-year increase, driven by strong demand for automobiles and high-technology products.