NEW YORK — Rising oil prices and persistent inflation fears pushed bond yields higher Tuesday, weighing down stocks on Wall Street.
The weak start to September follows a shaky, but mostly positive month for Wall Street. Every major index notched monthly gains in August. The same worries continue to hang over Wall Street, though, including anxiety over stubborn inflation, rising government debt, and the impact on the economy from global conflicts.
The S&P 500 fell 0.5%. The Dow Jones Industrial Average fell 105 points, or 0.2%, as of 10:16 a.m. Eastern time. The Nasdaq composite fell 0.9%.
Technology stocks were among the heaviest weights on the market. Nvidia fell 1.1% and Micron Technology fell 2.2%.
Much of the pressure being felt by Wall Street is coming from an ongoing sell-off in U.S government bonds. The yield on the 10-year Treasury, which tends to impact mortgage rates, rose to 4.76% from 4.75% late Monday.
The yield on the 2-year Treasury, which closely tracks expectations for Federal Reserve moves on interest rates, rose to 4.37% from 4.34% late Monday. That’s up significantly from about 3.50% at the beginning of 2026.
Bond yields have an inverse relationship to prices, and yields rise as prices fall. Rising yields signal that investors are demanding a higher return from Treasurys because they are becoming riskier. Growing government debt is highlighting that risk.
The U.S. debt surpassed $40 trillion two weeks ago, a shocking milestone as defense costs and interest on the burgeoning deficit make up an enormous share of federal spending. The bond sell-off is global, with other nations facing the same economic pressures.
Higher yields on bonds signal higher borrowing costs on mortgages and a wide range of other loans. Higher borrowing costs tend to weigh down investments, including stocks, while making it more difficult for businesses to expand.
Oil prices have been behind much of the pressure on inflation, bond yields and the broader stock market. The price of Brent crude, the international standard, rose 2% to $92.33. Energy costs remain high and volatile amid the ongoing U.S. war with Iran, which has essentially shut down the Strait of Hormuz where 20% of the world’s oil is shipped through.
Higher oil prices have pushed up costs for everything from gasoline to shipped goods, fueling inflation that has been squeezing households and businesses. Higher inflation has also been a problem for the Fed, which is aiming to bring inflation down to a 2% rate.
The rate of inflation is well above 3%, and Wall Street expects the Fed to raise interest rates before the year is over in order ease the rate of price increases.
Markets in Europe fell and markets in Asia were mixed.
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AP Business Writers, Elaine Kurtenbach, Michelle Chapman and Matt Ott contributed to this report.
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