NEW YORK (AP) — Stocks fell on Wall Street Tuesday as oil prices continued climbing, raising concerns about persistent inflation. The S&P 500 index decreased by 0.4%. The Dow Jones Industrial Average dropped 190 points, or 0.4%, as of 12:05 p.m. Eastern time, while the Nasdaq composite declined by 0.5%.
The decline at the start of September follows a mixed but generally positive month for Wall Street, with all major indices recording gains in August. Ongoing concerns include rising prices, government debt, and the effects of global conflicts on both the U.S. and global economies.
Technology stocks were among the largest contributors to the market's decline, with Microsoft falling 1.3% and Advanced Micro Devices decreasing by 2.4%. These companies' significant market capitalizations tend to influence the overall market direction, and their growth, particularly in the artificial intelligence sector, is increasingly dependent on borrowing, which becomes more costly as interest rates rise.
Much of the pressure on Wall Street is attributed to a continuing sell-off in U.S. government bonds. The yield on the 10-year Treasury rose to 4.77% from 4.75% late Monday, up from a low of 4.20% at the beginning of 2026. The yield on the 2-year Treasury, which closely tracks expectations for Federal Reserve interest rate moves, increased to 4.37% from 4.34% late Monday, significantly higher than approximately 3.50% at the beginning of 2026.
Bond yields rise as prices fall, indicating that investors are seeking higher returns from Treasurys due to increasing risk. The U.S. national debt surpassed $40 trillion two weeks ago, a notable milestone driven by defense costs and interest on the growing deficit, which constitutes a large portion of federal spending. This bond sell-off is not limited to the U.S., as other nations are experiencing similar economic pressures.
Higher bond yields lead to increased borrowing costs for mortgages and various loans, which can dampen investments, including stocks, and complicate business expansion.
Oil prices have significantly influenced inflation, bond yields, and the broader stock market. The price of Brent crude, the international benchmark, rose 2.3% to $92.61. Energy costs remain elevated and volatile, partly due to the ongoing U.S. conflict with Iran, which has disrupted the Strait of Hormuz, a key shipping route for 20% of the world's oil.
Rising oil prices have increased costs for goods and services, contributing to inflation that affects households and businesses. The Federal Reserve is targeting a 2% inflation rate, but current inflation is above 3%. Wall Street anticipates that the Fed will raise interest rates before the end of the year to address rising prices, with investors estimating a 66% chance of a rate hike at the upcoming September meeting, according to CME FedWatch.
The Fed will receive further updates on inflation ahead of the meeting, along with information on the job market. On Tuesday, the government reported a slight increase in U.S. job openings for July, with a broader monthly report for August set to be released on Friday.
Markets in Europe experienced declines, while markets in Asia showed mixed results.