US Stocks Slide as Oil Prices Surge Amid Iran Conflict

US stocks fell on Tuesday as investors began September amid rising oil prices and higher global bond yields. The Dow Jones Industrial Average declined 0.79%, while the S&P 500 and Nasdaq Composite also closed lower.

The surge in oil prices was driven by US airstrikes against Islamic Revolutionary Guard Corps targets in Iran, which pushed US West Texas Intermediate crude up 5.2% to $90.22 a barrel. Brent futures rose 4.6% to close at $94.65.

The escalation of tensions between the US and Iran has increased concerns that disruptions to energy supplies could persist, adding to inflation pressures and creating further uncertainty for financial markets. Energy was the strongest-performing sector among the 11 major S&P 500 sectors, while all constituents of the Philadelphia Semiconductor Index ended lower.

The combination of rising oil prices and higher bond yields has added pressure to equities, with investors increasingly pricing in the possibility of a rate hike at the Federal Reserve's upcoming meeting. CME's FedWatch tool showed a roughly 68% probability of a 25-basis-point rate increase at the September meeting.