Traders work on the floor of the New York Stock Exchange.
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Stock prices fell on Tuesday, the first day of September, as inflation concerns and soaring oil prices pushed up bond yields at home and abroad, raising concerns about whether the U.S. Federal Reserve would tighten monetary policy later this month.
of Dow Jones Industrial Average It dropped 419.02 points (0.79%) to end at 52,766.88. of S&P500 It fell 0.71% to 7,631.47. Nasdaq Composite It rebounded 1.03% to close at 26,099.77.
Oil prices rose after U.S. Central Command announced that U.S. forces were attacking Islamic Revolutionary Guard Corps targets in Iran. us oil Prices rose 5.2% to close at $90.22 per barrel. brent futures It closed at $94.65, an increase of 4.6%.
This added to oil’s jump earlier in the week following the resumption of military action by the US and Iran. On Monday, a tanker passing through the Strait of Hormuz was hit by three unknown projectiles. Additionally, President Donald Trump told Fox News on Monday, “We’re going to hit them hard,” threatening to counter Iran’s recent attacks on U.S. military bases in the region.
Global bond yields also continued to rise on Tuesday. US 10 year treasury Banknote yields have expanded to levels not seen since January 2025. 10 years Yields hit their highest levels since August 1996, and Germany’s benchmark yield rose to its highest level in 2011.
Yields have been rising around the world in recent days as traders worry that a sustained rise in oil prices could fuel inflation and affect the Fed’s interest rate path. The central bank is scheduled to hold its next meeting in two weeks. On top of that, September was a historically bad month for the stock market.
“Equity markets will always and forever have a hard time digesting the big, volatile movements in the bond market,” said Ross Mayfield, investment strategist at Baird. “I think this will continue both in the short and long term.”
Mayfield said that while there were concerns about inflation, there had not yet been enough changes in economic data to warrant a rate hike in September. Federal funds futures pricing currently gives the central bank a 68% chance of raising rates at its next meeting, according to the CME FedWatch tool.
“I know that the market is currently expecting a rate hike, or at least has better odds on a rate hike than on a hold. I still think September will hold, but we’ll probably have to hike at least once before the end of the year,” he said, warning that “a lot could change” ahead of the meeting, especially ahead of Friday’s release of the August non-farm payrolls report.
