Oil Prices Fuel Wall Street Slide Amid Bond Sell-Off and Rising Inflation

Wall Street stumbled on Tuesday under pressure from rising oil prices and a bond sell-off, despite a shaky but mostly positive month in August. The S&P 500 index fell 0.7%, while the Dow Jones Industrial Average lost 456 points or 0.9% by 1:26 p.m. Eastern time.

The technology sector was particularly hard hit, with Microsoft declining 1.3% and Advanced Micro Devices falling 3%. These companies' large market values give them significant influence over the broader market's direction and their growth has been heavily reliant on borrowing, which becomes more expensive as interest rates rise.

The bond sell-off is a major concern, with yields on both the 10-year Treasury and the 2-year Treasury rising. The yield on the 10-year Treasury rose to 4.79% from 4.75%, while the yield on the 2-year Treasury increased to 4.38% from 4.34%. This signals that investors are demanding a higher return from Treasurys due to growing government debt.

The U.S. national debt surpassed $40 trillion two weeks ago, with defense costs and interest on the burgeoning deficit making up an enormous share of federal spending. Higher yields on bonds mean higher borrowing costs for mortgages and other loans, which can weigh down investments and make it more difficult for businesses to expand.