• U.S. equities fell broadly at the start of September, with the S&P 500 down 0.7%, Nasdaq down 0.9%, and Dow down 0.8%, as a jump in oil prices and a global bond selloff revived inflation and interest-rate fears.
  • Technology shares were under heavier pressure because higher interest rates reduce the present value investors assign to distant future earnings; Nvidia (NVDA), AMD (AMD), Micron (MU), Microsoft (MSFT), and Alphabet (GOOG) were cited among the decliners.
  • The weakness followed renewed U.S.–Iran military exchanges, including reported strikes connected to the Strait of Hormuz, raising concerns about oil flows through a major shipping chokepoint; Brent crude rose above $90 per barrel, while the 10-year Treasury yield climbed to roughly 4.8%, its highest since early 2025.

U.S. stocks opened September on a sour note, extending a risk-off move that gathered steam as geopolitics and fixed-income markets collided. The S&P 500 shed 0.7%, the Nasdaq Composite fell 0.9%, and the Dow Jones Industrial Average dropped 0.8%, according to market data, though losses shifted throughout the session.

At the heart of the selloff is a surge in crude prices, with Brent climbing above $90 a barrel after reported U.S. strikes near the Strait of Hormuz and Iranian retaliatory attacks in Jordan and the UAE. The escalation has reignited worries about inflation just as investors were starting to believe the Federal Reserve was done hiking rates.

The 10-year Treasury yield jumped to around 4.8%, its highest level since early 2025, as global bond markets sold off. Higher yields are a direct challenge to equity valuations, particularly for growth stocks that rely on future earnings. The Nasdaq, heavy with tech and semiconductor names, felt the brunt, with reports of declines exceeding 1% in Nvidia, AMD, and Micron, while Microsoft and Alphabet also moved lower.

"The market is repricing the risk of a Fed hike later this month," said one portfolio manager, who asked not to be named. "Oil at $90 changes the calculus."

Indeed, markets now imply roughly a 66% chance of a rate increase in September, up from 41% a week earlier, according to fed funds futures. That repricing has been a key driver of the bond selloff, with global yields rising as investors reassess inflation and central-bank policy.

The episode is not just a U.S. story. European and Asian equities also felt pressure, though energy producers provided some offset as crude's rise boosts their near-term revenue prospects. Consumer-facing sectors, such as airlines and retailers, are seen as vulnerable to higher fuel costs, which can squeeze margins and household purchasing power.

The backdrop complicates the Fed's task. "Central banks face a dilemma: energy-led inflation is not something they can easily control, but they must respond to it," said a strategist at a major bank. The tension between taming inflation and avoiding overly restrictive conditions is now front and center.

September has historically been a weak month for stocks. Data from Reuters shows the S&P 500 has averaged a 0.7% decline in September since 1926, the only month with a negative average return. The Nasdaq has averaged a 1% drop in September since 1971. While not a forecast, the seasonal tendency may be amplifying caution.

Despite the weak start, the month comes after a strong August, with the S&P 500 up 2.6% and the Nasdaq up 3.9%. The Dow rose more than 1%, extending a five-month winning streak.

Investors now face a delicate balancing act. Short-term, markets will be sensitive to any further developments in the Middle East, crude prices, and Treasury yields. Longer-term, a de-escalation could allow the recent tech-led rally to resume, but a sustained oil shock would raise financing costs, pressure margins, and increase recession risks.

As one trader put it, "The market can handle a lot, but it can't handle an oil shock and a hawkish Fed at the same time." That's the scenario investors are now grappling with.

Correction: An earlier version of this article misstated the exact index moves; losses fluctuated during the session, with early reports placing the S&P 500 around -0.6% to -0.7% and the Nasdaq from -0.9% to -1.4%.