Wall Street Sinks on US-Iran Conflict; Nasdaq Falls 1.3% as Brent Tops $92 and Fed Hike Odds Jump to 65%

The Quick Take

• Nasdaq fell 1.29% to 26,029.85 and S&P 500 lost 0.66% as US-Iran military conflict escalated
• Brent crude surged above $92 per barrel and WTI gained over 2% as Hormuz Strait tensions intensified
• US 10-year Treasury yields hit 4.79% — highest since January 2025 — as markets priced a 65% chance of a September Fed rate hike

US equity markets opened sharply lower on September 1 as escalating conflict between the United States and Iran rattled investor confidence, with the Nasdaq Composite falling 1.29% to 26,029.85 and the S&P 500 declining 0.66% to 7,635.51. Brent crude surged above $92 per barrel — the highest level in recent months — as traders priced in supply disruption risk from the Strait of Hormuz, through which approximately 20% of global seaborne oil passes. The Dow Jones Industrial Average fell 0.44% to 52,953.28, as the risk-off move spread across all three major indices at the open.

The oil price surge directly translated into higher long-term US Treasury yields, with the 10-year rate rising to approximately 4.79% — a level not seen since January 2025 — as markets recalibrated inflation expectations under a sustained high-crude-price scenario. Markets now price a 65% probability of a Federal Reserve rate hike in September, a significant jump from prior weeks, reflecting how oil-driven inflation can override earlier expectations of a policy pause. Technology stocks bore the brunt of the selloff as rate-sensitive growth valuations compressed; Nvidia and major semiconductor names declined while energy equities outperformed, partly insulating the S&P 500 from a steeper Nasdaq-level drawdown.

Investors are watching two immediate catalysts: the JOLTS job openings report and ISM manufacturing data both due in the session, as strong employment or services demand would confirm the Fed's rationale for a September hike. More broadly, the duration of the US-Iran confrontation is the single most important macro variable: a diplomatic resolution would collapse both the oil risk premium and the hawkish Fed repricing simultaneously, potentially staging a sharp relief rally. Sustained conflict, however, could push Brent toward $100, cementing a September Fed hike and extending the bear phase for technology and rate-sensitive equities into Q4 2026.

Synthesized from 2 sources.