Dow Slides to Open September as Rising Oil Prices and Bond Yields Rattle Wall Street Once Again

The Dow Jones Industrial Average fell in early trading Tuesday as Wall Street opened September on a cautious note, with renewed fighting in the Strait of Hormuz, a continued rise in bond yields and growing uncertainty over the Federal Reserve's next move all weighing on stocks.

The Dow traded at 52,895.96 as of 9:32 a.m. Eastern time, down roughly 0.58% from Monday's close of 53,185.99. Futures on the S&P 500 and Nasdaq-100 also fell heading into the session, dropping about 0.6% and 1.4%, respectively, following a solid close to the month of August, according to Yahoo Finance.

The renewed pressure on markets traces back to overnight developments in the Middle East. Two oil tankers, one Saudi-owned and one South Korean-owned, were struck by projectiles Monday night as the United States and Iran resumed hostilities in the Strait of Hormuz, extending a six-month war that has largely settled into what analysts have described as a stalemate. Daniela Hathorn, senior market analyst at Capital.com, characterized the mood on trading desks as investors weighed multiple sources of uncertainty simultaneously. "Markets are starting September cautiously, with investors balancing renewed geopolitical uncertainty, elevated bond yields and the latest US economic data," Hathorn said, according to TheStreet. "The S&P 500 remains close to record territory, but momentum has softened after a strong summer."

Bond yields continued climbing Tuesday, adding further pressure on equities. The 10-year Treasury yield rose to 4.78%, its highest intraday level since January 2025, according to Yahoo Finance, as elevated oil prices stoked inflation concerns and reinforced expectations that the Federal Reserve could move toward another interest rate increase at its September meeting.

Monday's regular trading session had already set a downbeat tone heading into Tuesday. The Dow fell 0.7% Monday to close at 53,186 points, while the S&P 500 and Nasdaq Composite declined 0.33% and 0.12%, respectively, according to Trading Economics. Nine of the S&P 500's 11 sectors finished lower on the day, led to the downside by communication services, utilities and industrials, with individual decliners including Alphabet, down 3.16%, Amazon, down 2.45%, and Honeywell International, down 1.9%.

The pullback comes as Wall Street enters what has historically been a difficult stretch for stocks. According to Carson Group chief market strategist Ryan Detrick, September is statistically the weakest month of the year for equities, with the S&P 500 averaging a 0.6% decline during the month and posting a positive return in only 45% of years historically, a track record matched only by February among all 12 months. Detrick's analysis also noted that market volatility tends to increase during September, a dynamic some analysts have said could be compounded this year by this fall's midterm election campaigns.

Despite the softer near-term backdrop, some strategists have cautioned against reading too much into seasonal patterns alone. LPL Financial chief technical strategist Adam Turnquist said he expects continued volatility in the weeks ahead but suggested that pullbacks could also present buying opportunities for investors willing to look past short-term turbulence, given that stocks enter September carrying double-digit year-to-date gains and earnings expectations that have continued trending higher.

Investors are also looking ahead to a busy stretch of economic data this week that could further shape the market's direction. Manufacturing and services activity readings are due Tuesday, followed by the closely watched August jobs report Friday, both of which are likely to influence expectations for the Federal Reserve's policy path heading into its next meeting later this month.