Oil Prices Soar as Iran Conflict Continues

U.S. stocks declined on Tuesday as they returned to trading after a three-day weekend, following increased fighting in the war with Iran that pushed oil prices higher.

The S&P 500 fell 0.4%, while the Dow Jones Industrial Average dropped 520 points or 1% by 10 am Eastern time. The Nasdaq composite also declined 0.3%. In the oil market, Brent crude rose 1% to $97.95 after briefly reaching a high of $99.46.

The price increase is due in part to concerns over the Strait of Hormuz's reopening and global crude flow. This has worsened inflation worries and raised expectations for the upcoming reports on wholesale and consumer inflation this week.

On Thursday, the U.S. government will release its August report on inflation at the wholesale level, which is expected to show an acceleration to 5.4% from July's 4.7%. The more closely watched report on consumer inflation will arrive on Friday, with economists predicting a slight easing to 3.3% from July's 3.4%.

The Federal Reserve will meet next week to decide whether to cut, raise or hold interest rates steady. Historically, the Fed raises interest rates when inflation is high, which would filter into the bond market and make borrowing more expensive for companies and individuals, potentially slowing down the economy and reducing prices.