U.S. equities declined on Tuesday as trading resumed following the three-day holiday weekend, with the latest escalation in hostilities with Iran driving crude prices upward.

The S&P 500 declined by 0.6%, while the Dow Jones Industrial Average plummeted 628 points—a 1.2% drop—and the Nasdaq composite edged down 0.3%.

They felt mounting pressure from rising oil prices after a barrel of Brent crude briefly surged to $99.46.

It later settled at $97.92, up 0.9%, continuing its climb from roughly $72 in early July as heightened Middle East fighting keeps the global oil supply constrained.

The surge in oil prices has heightened concerns about persistent high inflation, which continues to burden households and businesses nationwide, thereby adding weight to two economic reports due later this week.

On Thursday, the U.S. government will release its August wholesale inflation data, which economists expect to show a rise to 5.4% from 4.7% in July.

The conflict with Iran is placing considerable strain on global markets.

The more closely watched inflation report, reflecting what U.S. consumers are experiencing, is due on Friday.

This update will show how much more people are paying for groceries, clothing, and other living costs compared to a year earlier, with economists expecting a slight easing to 3.3% from July's 3.4% rate.

However, this remains well above the Federal Reserve's 2% target.

This week's inflation figures will be the last to come out before the Fed convenes next week to decide on cutting, raising, or holding interest rates steady.

When inflation runs high, the Fed's standard approach is to hike its key rate.

That action would then spread through the bond market, making borrowing pricier for firms and households, slowing the economy, dragging down investment values, and hopefully containing inflation.

President Donald Trump, however, has been pushing for lower interest rates, which could give the economy and inflation an extra boost.

Meanwhile, the Federal Reserve's new chair, Kevin Warsh, has said he wants to give financial markets fewer hints about the Fed's short-term plans for interest rates.

This development has prompted traders to assign roughly a 60% likelihood that the Federal Reserve will raise its federal funds rate when its upcoming meeting concludes on Sept. 16, as indicated by data from CME Group.

In the bond market, the yield on the 10-year Treasury edged up to 4.79% from 4.78%, hovering close to its peak since the autumn of 2023.

Elevated Treasury yields intensify the pressure on corporations to bolster their earnings, thereby supporting their share prices.

On Wall Street, Boston Scientific fell 5.9% after announcing that a cybersecurity-related network outage earlier this summer makes it unlikely to meet its third-quarter and full-year 2026 sales and profit forecasts.

Although the company expects to recover some of the revenue as it gradually expands operations globally, fulfills customer orders, and reduces remaining backlogs, the full impact is still unknown.

Shares of Novartis listed in the United States plunged 13.9% after the Swiss pharmaceutical firm issued a discouraging assessment of a trial for a treatment targeting individuals with myotonic dystrophy type 1, a neuromuscular disorder.

Qualcomm helped curb the market's decline, advancing 3.2% after announcing a collaboration with Amazon on large-scale AI data centers.

The agreement also grants Amazon the option to acquire up to 25 million Qualcomm shares at $161.26 per share.

In overseas equity markets, Japan’s Nikkei 225 tumbled 1.7%, weighed down by losses among major exporters, which were adversely affected by the yen’s sustained appreciation against the U.S. dollar.

A stronger yen reduces the value of dollar-denominated sales when Toyota Motor, Panasonic Holdings, and other exporters convert them back into Japanese currency.

The Bank of Japan is also scheduled to meet next week on interest rates, and speculation is growing that it could raise rates, which might further strengthen the yen.

In China, equities declined 0.4% in Hong Kong and advanced 0.2% in Shanghai following the world’s second-largest economy’s announcement that its exports surged 25% year-on-year in August, buoyed by robust demand for automobiles and high-tech products.