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US markets fell sharply as renewed fighting with Iran pushed oil prices higher, lifted bond yields, and raised fears that inflation could force the Federal Reserve back into rate hikes.
The Dow Jones Industrial Average fell more than 620 points, while the S&P 500 and Nasdaq also closed lower. Bond yields climbed as traders worried that higher oil prices could feed into inflation and keep interest rates elevated.
Brent crude rose about 2% to roughly $98 a barrel, moving closer to the $100 mark. Investors fear a longer war could drive energy prices higher and put more pressure on consumers, businesses, and central banks.
The 10-year US Treasury yield moved close to 4.5%, a key psychological level for markets. The 30-year yield traded near 5%, while the 20-year yield briefly moved above that level.
Higher yields often pressure stocks, especially technology and growth companies, because they raise borrowing costs and make safer assets more attractive.
Kuwait said its army was confronting hostile missile and drone attacks, while US Central Command reported that American forces defeated several missile and drone attacks and carried out self-defense strikes on Iran’s Qeshm Island.
President Donald Trump told The New York Times that Iran had agreed not to obtain a nuclear weapon, though he added that Tehran could later “change their mind.” The mixed signals added to market uncertainty.
Fresh US economic data has also added to concerns. Inflation remains elevated, and stronger-than-expected job numbers suggest the economy may still be strong enough for the Federal Reserve to keep policy tight.
Markets are now weighing the risk that the war could push oil prices higher, reignite inflation, and force the Fed toward another round of rate hikes.
The longer the war continues, the more pressure it places on stocks, bonds, currencies, and energy markets. Investors are watching oil, yields, and any sign of a real US-Iran deal.
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