US stock market: Dow falls over 350 points, Nasdaq drops over 1% as bond yields, oil prices rise

US stocks fell on Tuesday, September 1, the first trading day of September, as rising Treasury yields, elevated oil prices and renewed uncertainty over the West Asia conflict weighed on investor sentiment. The declines came after Wall Street ended August with solid gains, with investors turning cautious ahead of the Federal Reserve’s September policy meeting and reassessing the outlook for interest rates.

The Dow Jones Industrial Average fell 0.7%, or about 363 points, while the S&P 500 declined 0.7%. The tech-heavy Nasdaq Composite dropped 1.3%, with weakness in megacap technology stocks weighing on the broader market. Nvidia, Advanced Micro Devices and Micron Technology fell around 2% each, while Microsoft and Google parent Alphabet also traded lower.

The pressure on markets intensified after Federal Reserve Governor Michael Barr said he would be prepared to support an interest-rate hike if inflation fails to ease sufficiently. Barr, a permanent voting member of the Federal Open Market Committee, said policymakers could take more time if inflation is clearly moving towards the Fed’s 2% target, but would need to act decisively if price pressures remain persistent. His comments come as investors weigh the impact of higher energy prices and geopolitical tensions on the inflation and interest-rate outlook.

Global bond yields surge

Bond yields climbed across major markets, adding another layer of pressure on equities.

The benchmark US 10-year Treasury yield rose 3 basis points to 4.788%, its highest level since January 2025.

Japan’s 10-year government bond yield jumped more than 6 basis points to 3%, reaching its highest level since August 1996. The country’s two-year government bond yield also touched 1.81%, its highest level in 31 years.

Germany’s benchmark 10-year yield also climbed to its highest level since 2011.

Higher yields can weigh on stocks by increasing borrowing costs and making bonds relatively more attractive compared with riskier assets.

Dow futures drop over 250 points as oil prices surge, Treasury yields hit highs

US stock futures fell on Tuesday, September 1, as rising bond yields and elevated oil prices renewed inflation concerns, putting pressure on investors ahead of the Federal Reserve’s next interest-rate decision.

Dow Jones Industrial Average futures fell over 250 points, or 0.5%, while S&P 500 futures slipped 0.5%. Nasdaq-100 futures declined nearly 1%, with technology stocks among the biggest early decliners.

Investors were also weighing renewed uncertainty around the conflict involving the US and Iran, along with the outlook for interest rates. Higher oil prices have added to concerns that a resurgence in inflation could complicate the Federal Reserve’s policy path later this month.

US stocks entered September after posting solid gains in August, with the major indexes carrying double-digit gains for the year. However, rising energy prices and higher bond yields have added to caution at the start of a month that has historically been one of the weaker periods for equities.

In an article titled “Why The Worst Month of the Year Likely Won’t Bring Rain,” Carson Group’s Ryan Detrick noted that September has historically been the weakest month for US stocks. The S&P 500 has declined an average of 0.6% during the month and has delivered a positive return only 45% of the time, according to Detrick. September, along with February, is the only month of the year with a historically negative average return.

Oil prices climb as West Asia tensions persist

Oil prices rose as renewed hostilities between the US and Iran continued to fuel concerns over global energy supplies.

US West Texas Intermediate crude futures gained more than 2% to $87.81 a barrel, while Brent crude, the global benchmark, rose 1.8% to $92.15.

The rise in crude prices has heightened concerns over a potential inflationary impact, particularly if elevated energy costs persist.

Tech stocks under pressure

Technology shares were lower in premarket trading. Nvidia, AMD and Micron each fell more than 1%, while Microsoft declined about 1%. Alphabet, Google's parent company, slipped 0.6%.

The moves come as investors assess whether higher energy prices and rising yields could challenge the equity market’s strong run this year.

Also Read: Asian stocks slip as fresh US-Iran clashes push Brent above $91, stoke rate-hike fears