U.S. stock markets declined broadly on Tuesday amid rising oil prices and increasing bond yields, as renewed military tensions in the Middle East heightened concerns about persistent inflation. The S&P 500 index dropped 0.7 percent, while the Dow Jones Industrial Average fell 0.8 percent and the Nasdaq Composite declined 1 percent. These losses marked the third consecutive day of declines following a mostly positive August performance, during which all major indexes recorded monthly gains.

The recent market pressure comes amid escalating geopolitical risks, particularly linked to U.S. military strikes against Iran and the resulting disruption of global oil shipments through the Strait of Hormuz—a critical passage accounting for about 20 percent of worldwide oil trade. Brent crude prices surged 4.6 percent to $94.65 per barrel, and U.S. oil closed above $90 per barrel for the first time in over a month, rising 5.2 percent to $90.22. Elevated energy costs continue to contribute to inflationary pressures, impacting costs across transportation and consumer goods sectors.

Technology stocks weighted heavily on the market’s downward movement, with major companies such as Nvidia, Amazon, and Advanced Micro Devices experiencing declines ranging from 1.5 percent to 2.4 percent. These firms have been key drivers of recent market gains, largely buoyed by borrowing tied to growth in the artificial intelligence sector. However, rising interest rates have increased their financing costs, exerting additional pressure on their stock prices.

The bond market also saw intensified selling, pushing yields higher across the curve. The yield on the 10-year U.S. Treasury note climbed to 4.79 percent from 4.75 percent, while the two-year Treasury yield increased to 4.39 percent from 4.34 percent. Both yields have risen significantly since the start of 2026, reflecting concerns about elevated U.S. government debt, which surpassed $40 trillion earlier this month. Higher yields indicate greater risk perceived by investors and lead to increased borrowing costs for mortgages and business loans, which can dampen investment and economic expansion.

Market participants remain focused on inflation data and Federal Reserve policy ahead of the central bank’s September meeting. Inflation remains above 3 percent, well above the Fed’s 2 percent target, prompting expectations of a possible rate hike later this year. According to CME FedWatch data, there is currently a 66 percent probability that the Fed will raise interest rates at its upcoming meeting. Investors also monitored U.S. labor market data released this week, with job openings showing a modest increase in July and a broader employment report for August expected on Friday.

Markets outside the United States reflected similar uncertainty, with European indexes declining and Asian markets exhibiting mixed results.