US stocks today: Nasdaq crashes over 1% as bond selloff, oil rise fuel inflation anxiety

Wall Street began September under pressure Tuesday as a renewed jump in oil prices stirred fresh inflation concerns, pushing US Treasury yields higher and weighing on stocks.

The move marks a weak start to a month that follows a largely positive August, when all three major US stock indexes posted gains. But the concerns that have been hanging over markets have not gone away. Investors remain focused on stubborn inflation, rising government debt and the economic fallout from global conflicts.

The S&P 500 fell 0.5%, while the Dow Jones Industrial Average was down 105 points, or 0.2%, as of 10:16 a.m. ET. The Nasdaq composite declined 0.9%, with technology stocks among the biggest drags. Nvidia fell 1.1% and Micron Technology lost 2.2%.


Much of the pressure was coming from the bond market, where investors continued to sell US government debt. The yield on the benchmark 10-year Treasury rose to 4.76% from 4.75% on Monday, while the 2-year Treasury yield climbed to 4.37% from 4.34%.

The move in shorter-dated yields is particularly important for markets because the 2-year Treasury closely tracks expectations for Federal Reserve interest-rate decisions. Its yield is now significantly above the roughly 3.50% level seen at the beginning of 2026.

Bond prices and yields move in opposite directions, meaning the latest rise in yields reflects a decline in Treasury prices. Higher yields also point to investors demanding greater returns to hold government debt as concerns over the US fiscal position grow.

The US national debt crossed $40 trillion two weeks ago, adding to worries about the scale of government borrowing. Defence spending and interest costs on the growing deficit are taking up an increasingly large share of federal spending, while the bond sell-off has spread globally as other economies confront similar pressures.

But oil is providing the immediate inflation trigger.

Brent crude, the international benchmark, rose 2% to $92.33 a barrel. Energy prices remain elevated and volatile amid the ongoing US war with Iran, which has effectively shut the Strait of Hormuz, a critical route through which about 20% of the world's oil is shipped.

That matters beyond the energy market. More expensive oil raises costs across the economy, from gasoline to transported goods, putting additional pressure on households and businesses already dealing with elevated prices.

For the Federal Reserve, the renewed oil shock complicates an already difficult inflation fight. The central bank is targeting inflation at 2%, but the inflation rate remains above 3%.

Markets are therefore increasingly focused on the possibility that interest rates could rise before the end of the year, rather than continuing lower.

Higher Treasury yields would raise borrowing costs across the economy, including for mortgages and other loans. That can make it more expensive for companies to invest and expand, while also reducing the appeal of riskier assets such as stocks.

Markets in Europe fell on Tuesday, while Asian markets were mixed, underscoring how concerns over oil, inflation and government debt are extending beyond Wall Street.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times)