Major US stock indexes ended lower as Brent crude climbed above $95 a barrel, reviving inflation concerns and uncertainty over the Federal Reserve’s next move.
Wall Street began September with broad losses on Tuesday, September 1, after a renewed US attack on Iran unsettled investors and pushed oil prices sharply higher.
The continuing war in Iran and the latest US military action reversed some of the optimism that had supported markets during the previous week. Rumors of possible peace talks had earlier helped bring oil prices down and contributed to weekly gains for US shares.
That more positive mood faded as investors reassessed the risk of a prolonged conflict and its possible effects on energy costs, inflation and interest rates. Tuesday marked a third consecutive losing session for Wall Street.
Dow, S&P 500 and Nasdaq retreat
The Dow Jones Industrial Average closed 0.79% lower at 52,766.88 points. The broader S&P 500 declined 0.71% to 7,631.47, while the technology-heavy Nasdaq Composite recorded the largest fall among the three benchmarks, losing 1.03% to end at 26,099.77.
Oil prices moved in the opposite direction. Brent crude rose 5.23% and traded above $95 per barrel during Tuesday’s session following the attacks.
If oil remains expensive, inflation may prove harder to contain, potentially limiting the Federal Reserve’s room to adopt a less restrictive policy.
Treasury yields extend their rise
US government bond yields also increased as markets considered the implications of renewed inflation pressure, Newsit reported. The yield on the benchmark 10-year Treasury rose by 3.4 basis points to 4.792%, after reaching 4.798% earlier in the day.
This was the 10-year yield’s fifth consecutive increase, its longest rising streak since March. The intraday level was also its highest since January 14, 2025.
The 30-year Treasury yield gained 1.4 basis points to 5.263%. It had earlier climbed as high as 5.288%, the highest level recorded since August 19.
Federal Reserve meeting comes into focus
Investors are now looking toward the Federal Reserve’s meeting scheduled for September 15 and 16. Federal Reserve governor Michael Barr told CNBC that the US central bank would need to raise interest rates if inflation failed to decline quickly. His remarks added to market attention on whether policymakers may have to keep financial conditions restrictive or tighten them further.
The combination of weaker equities, rising Treasury yields and higher crude prices reflected a swift change in market expectations. Hopes for diplomatic progress had previously eased concern about energy supplies, but the latest attack brought geopolitical risk back to the center of trading.
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