Dow falls 250 pts as oil, Treasury yields rise and Fed rate hike bets grow

US stocks opened lower on Tuesday, the first trading day of September, as rising Treasury yields, higher oil prices and renewed Middle East tensions pressured investor sentiment.

Traders also increased their expectations for a Federal Reserve rate hike later this month, adding to concerns over the outlook for equities.

The Dow Jones Industrial Average was down 254 points while the S&P 500 fell 0.65%. The Nasdaq Composite declined 1.32%.

The weakness followed a difficult end to August for stocks and came as investors entered September, historically the weakest month for the S&P 500.

Since 1926, the benchmark index has recorded an average September decline of 0.7%, according to data cited by Fisher Investments.

Rising yields and oil pressure stocks

Higher bond yields remained a key source of pressure for equities.

The US 10-year Treasury yield climbed to levels not seen since January 2025, while benchmark yields in other major markets also moved higher.

Japan’s 10-year government bond yield reached its highest level since August 1996, while Germany’s benchmark yield climbed to a level last seen in 2011.

The rise in global yields has been driven partly by concerns that elevated oil prices could keep inflation pressures high.

Higher Treasury yields can also reduce the relative appeal of equities by increasing returns available from risk-free government debt.

Oil prices extended their gains on Tuesday. US crude rose more than 2% to trade above $87 a barrel, while Brent futures gained more than 1% to around $92.

The increase followed renewed military activity between the US and Iran.

Concerns over potential disruptions to energy supplies have pushed crude prices higher, with a tanker traveling through the Strait of Hormuz reportedly struck by three unknown projectiles on Monday.

The energy sector benefited from the move in crude prices. Exxon Mobil gained 1.49%, and Devon Energy advanced 1.44%.

Investors await jobs data and Fed signals

Investors are also preparing for a series of labor-market reports that could influence expectations for Federal Reserve policy.

The Labor Department’s Job Openings and Labor Turnover Survey is due later Tuesday, while the more closely watched nonfarm payrolls report is scheduled for Friday.

The data will be assessed against the backdrop of recent comments from Fed Chair Kevin Warsh, who has emphasized inflation as a key policy concern.

A stronger-than-expected inflation outlook could reinforce expectations for tighter monetary policy, while labor-market weakness could influence the timing of future policy changes.

Technology stocks were among the biggest decliners.

Nvidia, Intel and AMD fell between 2% and 3.22%, while Micron Technology and Microsoft also moved lower. Alphabet declined 1.22%.

Robinhood bucked the broader trend, rising 1.77% after Morgan Stanley upgraded the stock.

Energy stocks advanced alongside crude prices.

Overseas markets were mixed. Japan’s Nikkei 225, Australia’s S&P/ASX 200 and China’s CSI 300 declined, while South Korea’s Kospi gained.

European stocks were broadly lower, with the Stoxx 600 down 0.6% in mid-morning trading. Oil and gas stocks were an exception, rising 1.3% as crude prices climbed.