U.S. stocks fell Tuesday as American military strikes on Iranian targets sent oil prices higher and pushed global bond yields to multiyear highs. The Dow Jones Industrial Average dropped 412 points, or 0.8%; the S&P 500 declined 0.7% and the Nasdaq Composite slid 0.9%.

U.S. Central Command said American forces were attacking Islamic Revolutionary Guard Corps targets in Iran on Tuesday. U.S. crude surged past $89 per barrel and Brent futures topped $93, each up roughly 4%. The strikes came a day after a tanker in the Strait of Hormuz was struck by three unidentified projectiles, an incident that prompted President Donald Trump to vow retaliation for Iran’s ongoing attacks on American military installations in the area.

Rising oil prices stoked fears that inflation could stay elevated, complicating the Federal Reserve’s next move on interest rates. The central bank is scheduled to meet in two weeks. Fed funds futures pricing shows a 66% chance of a rate increase at that meeting.

Ross Mayfield, an investment strategist at Baird, said the market is struggling with volatility in the bond market. “Always and forever, the stock market is going to struggle to digest big and kind of volatile moves in the bond market,” Mayfield told CNBC. “I think this is with us for the near term and the long term.”

Mayfield said he still expects the Fed to hold rates in September, though he believes at least one hike will come before year’s end. He noted that the August nonfarm payrolls report, due Friday, could shift the picture before the meeting.

Global bond markets also came under pressure. The U.S. 10-year Treasury yield reached a peak not recorded since January 2025. Japan’s 10-year yield touched 3%, a level last seen in 1996, and sovereign yields in Germany and France similarly advanced to their highest points in years. The Wall Street Journal reported that ballooning government deficits worldwide, heavier competition from corporate debt issuers, and Fed Chair Kevin Warsh’s unwillingness to signal future policy moves each played a role in driving the bond selloff.

Gold fell $85.50, or about 1.9%, to $4,396 per ounce. The Cboe Volatility Index, a measure of expected market turbulence, rose 5.8% to 15.78.