U.S. stock markets declined Wednesday as crude oil prices surged above $100 a barrel amid escalating tensions in the ongoing conflict between the United States and Iran. As of midday Eastern Time, the Dow Jones Industrial Average fell 413 points, or 0.8 percent, the S&P 500 dropped 0.5 percent, and the Nasdaq composite declined 0.7 percent. The downturn was widespread, with retail stocks notably weak; Amazon shares fell 2.2 percent and Starbucks declined 2 percent.

The volatility was largely driven by developments in the Middle East, where the U.S. military destroyed five Iranian tankers in a series of attacks on Tuesday. The conflict, which began in February, has significantly disrupted maritime traffic through the Strait of Hormuz, a critical chokepoint previously responsible for about 20 percent of global oil shipments. Brent crude, the international benchmark, rose 3.4 percent to $101.24 per barrel, the first time it has surpassed the $100 mark since July.

Rising oil prices have exacerbated inflationary pressures already affecting the U.S. economy. Gasoline prices averaged $4.22 per gallon nationwide, up roughly 32 percent from a year earlier. Diesel costs hit a record high last Friday and continued to climb, reaching an average of $5.94 per gallon, further impacting shipping and production expenses. Higher fuel costs contribute both directly to consumers’ budgets and indirectly through increased prices for goods.

Inflation has been persistently elevated even before the intensification of hostilities, partly due to ongoing trade tensions between the U.S. and other countries, notably Canada. Market participants anticipate upcoming inflation data releases later this week, including the Producer Price Index (PPI) for August on Thursday and the Consumer Price Index (CPI) for August on Friday. Early forecasts suggest inflation will remain above 3 percent, above the Federal Reserve’s 2 percent target.

The Fed has kept interest rates steady recently but is widely expected to consider a rate hike next week, with market data reflecting a 62 percent probability of an increase. Higher interest rates aim to moderate economic activity and reduce inflation but also make borrowing more costly for businesses and consumers.

Bond markets also influenced stock performance Wednesday as Treasury yields rose. The Treasury Department announced plans to buy back up to $6 billion in long-term debt to help contain escalating yields, which increase borrowing costs and generally pressure equity markets. Despite the buyback plan, yields on the 10-year Treasury note rose to 4.85 percent, and the 2-year Treasury yield rose to 4.42 percent by midday.

Elsewhere on Wall Street, Meta Platforms shares gained 6.5 percent following the launch of Muse, a personal artificial intelligence assistant designed to help users with everyday tasks such as scheduling and shopping. Meanwhile, European stock markets declined and Asian markets closed mixed amid ongoing geopolitical and economic uncertainties.