US stocks fell on Tuesday as investors watched the US-Iran war and fresh trade tensions with Canada. The Dow Jones Industrial Average dropped 511 points, or 0.7%, while the S&P 500 fell 0.2% and the Nasdaq Composite slipped 0.1%. US markets had remained closed on Monday for the Labor Day holiday.
Rising oil prices added pressure on Wall Street. Oil prices climbed for the third straight session and reached their highest level in about six weeks after the US and Iran exchanged strikes over the weekend, according to CNBC. Brent crude rose 2.3% to $99.22 a barrel, moving closer to the key $100 level. West Texas Intermediate (WTI) crude gained 3.3% to $94.54 a barrel.
Oil prices near $100
The rise in oil prices is creating fresh inflation worries. Crude prices have jumped sharply over the past month as the US-Iran war continues, raising concerns that higher energy costs could push inflation higher. Higher inflation could also affect interest rates. Investors are worried that rising energy prices could keep Treasury yields elevated and make it harder for the Federal Reserve to lower interest rates.
US Treasury yields rise
US Treasury yields have already climbed to important highs. The 10-year Treasury yield reached its highest level since November 2023 last week, while the 2-year Treasury yield touched its highest level since January 2025, according to CNBC.
US inflation data in focus
Investors are now waiting for fresh US inflation data. Dan Coatsworth, head of markets at AJ Bell, said investors will closely watch inflation figures this week to see whether higher energy prices are starting to affect broader inflation, according to CNBC.
The Federal Reserve’s next policy meeting is also in focus. The Fed is scheduled to hold its monetary policy meeting next week, with traders watching closely for clues about what happens to interest rates.
Also read: Oil prices surge 3%: Why Brent is nearing $100 as Middle East war risks grow
Fed rate hike bets
Markets are currently pricing in a 60% chance of a 0.25 percentage-point rate hike. The probability comes from the CME Group’s FedWatch tool, according to CNBC. Those rate-hike expectations could change this week. Wholesale inflation data is due on Thursday, followed by consumer inflation data on Friday, and both reports could influence traders’ expectations for the Fed.
US-Canada trade tensions
Another jump in oil prices could further change those expectations. Continued fighting and rising tensions in the Middle East could push energy prices even higher, adding to inflation concerns. US-Canada trade tensions are another worry for investors.
Canada is set to impose retaliatory tariffs on around $20 billion worth of US goods starting Tuesday, CNBC reported. President Donald Trump also warned Canadian aircraft maker Bombardier. Trump said Bombardier would not be able to sell aircraft in the US unless Canada starts making its products in the US.
Qualcomm stock jumps
Qualcomm shares jumped after the company announced a partnership with Amazon Web Services. Qualcomm is working with AWS to help build AI infrastructure, according to the company’s statement cited by CNBC. The partnership focuses on growing demand for AI computing. Qualcomm said the deal will combine AWS’s AI infrastructure with Qualcomm’s expertise in power-efficient processors, chip design and system integration.
Qualcomm shares rose more than 7% after the announcement. The strong move made Qualcomm one of the major gainers in the market on Tuesday. Nasdaq-100 futures were performing better than other major US stock futures. Nasdaq-100 futures gained 0.2% in premarket trading as semiconductor stocks moved higher.
Chip stocks gain
Chip stocks were among the stronger performers. The iShares Semiconductor ETF gained 1.7%, while Nvidia rose 0.7% and Broadcom gained 1.1%. Intel was one of the biggest chip-stock gainers. Intel shares jumped 4.7% in premarket trading, CNBC reported.
Also read: Gold price today: Why gold is falling as oil rises and Fed rate hike bets grow
S&P 500 and Dow futures, however, were lower. This showed a mixed picture in the US market before regular trading began, with technology and semiconductor stocks holding up better than the broader market.
Bloom Energy stock rises
Bloom Energy shares also jumped after news about its upcoming S&P 500 inclusion. The fuel-cell company is set to join the S&P 500 on September 21, according to CNBC. Bloom Energy shares gained more than 6%. The company has benefited from growing demand for power linked to AI data centers. Bloom Energy has had a huge run this year. Its stock has gained around 190% in 2026.
Roivant Sciences was another major premarket mover. Its shares surged 24% after the pharmaceutical company announced positive Phase 2 results for its subsidiary Pulmovant’s drug mosliciguat. The drug is being tested for pulmonary hypertension linked to interstitial lung disease. Roivant said the trial showed a clinically meaningful and statistically significant reduction in pulmonary vascular resistance compared with placebo, according to CNBC.
Lockheed Martin shares moved higher after an analyst upgrade. The defense contractor gained 0.7% after UBS upgraded the stock to buy from neutral. UBS said Lockheed Martin could have stronger earnings growth than investors currently expect. The bank pointed to what it called underappreciated earnings growth potential.
Novartis stock falls
Novartis was one of the biggest losers in early trading. Shares of the Swiss drugmaker plunged 12% after results from a Phase 3 trial showed its del-desiran drug did not produce a significant improvement in patients with myotonic dystrophy type 1. The Novartis setback added to a difficult week for the company. The stock was down about 10% in early trading and was on track for its worst trading day ever.
This was Novartis’ third major drug-development setback in one week. Days earlier, the company said its pelacarsen drug failed to reduce the risk of cardiovascular events in a late-stage trial. Novartis had also paused eight clinical trials of its experimental rap-cel cell therapy. The company took that step after three patients died, according to a Reuters report.
Europe bond yields rise
Government bond yields also moved higher in Europe. Some major government bond yields reached fresh multi-year highs as oil prices moved closer to $100 and inflation fears increased. France’s 30-year government bond yield hit its highest level since April 2008. Germany’s benchmark 10-year Bund yield also reached its highest level since early 2011.
Overall, Wall Street faced pressure from several directions on Tuesday. Rising oil prices, the ongoing US-Iran conflict, inflation concerns, possible Fed rate hikes and renewed US-Canada trade tensions all weighed on investor sentiment, while chip stocks and a few company-specific gainers provided some support.