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Update: Equity Markets Fall Intraday as Oil, Yields Surge

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Update: Equity Markets Fall Intraday as Oil, Yields Surge

(Updates with latest market prices and developments.)

US benchmark equity indexes were lower intraday, as surging oil prices and bond yields kept inflation-wary traders on the edge.

The Nasdaq Composite was down 1% at 26,113.9 after midday Tuesday. The Dow Jones Industrial Average shed 0.8% to 52,752.6, while the S&P 500 lost 0.7% to 7,633.2. The indexes finished the previous trading session lower.

Among sectors, consumer discretionary led the laggards intraday Tuesday, while energy paced the gainers.

West Texas Intermediate crude oil jumped 4.4% to $89.57 a barrel, while Brent advanced 3.9% to $94.04.

The US military launched fresh attacks on Iran, striking Islamic Revolutionary Guard Corps targets, the US Central Command said Tuesday in a post on social media platform X.

Washington is striking "Iranian targets" near the Strait of Hormuz, US President Donald Trump said Tuesday.

"If the failed nation of Iran retaliates for this very justified attack, they will be hit again at a much harder and higher level," Trump said in a social media post.

The latest US military actions came a day after Iran reportedly attacked US bases in Jordan and the United Arab Emirates, in retaliation for Washington striking Iranian rocket launchers on Tehran's Larak Island.

US Treasury yields jumped intraday Tuesday, with the 10-year rate up 3.2 basis points at 4.79%, reaching its highest level since January 2025. The two-year yield rose 3.9 basis points to 4.39%.

Government borrowing costs are surging "as rising oil prices continue to fuel inflation concerns and as investors increase expectations for firmer (Federal Reserve) policy," Stifel said in a note to clients.

Markets are now pricing in a 68% probability that the US central bank will increase its benchmark lending rate by 25 basis points later this month, compared with about 40% a week ago, according to the CME FedWatch tool. The probability that the Fed will keep interest rates steady fell to 32% from 60%.

The Fed should tighten monetary policy unless inflation cools down as hoped, Governor Michael Barr said Tuesday, adding to a growing chorus of hawkish views from policymakers. In his debut Jackson Hole speech as Fed chief on Friday, Kevin Warsh said that the central bank's primary focus should be on prices, given that the US is doing well on the employment front.

In economic news, the US manufacturing sector continued to expand in August, with an Institute for Supply Management survey pointing to a slight deceleration sequentially and S&P Global (SPGI) data indicating a steady growth rate.

In company news, Nio (NIO) posted a 69% year-over-year increase in its second-quarter revenue amid growth in vehicle deliveries, which are expected to continue rising in the ongoing quarter. The Chinese electric vehicle maker's American depositary receipts were down 4.5% intraday.

Palo Alto Networks (PANW) shares fell 6.1%, among the worst performers on the S&P 500.

Palo Alto is scheduled to report its latest quarterly financial results after the closing bell Tuesday, along with Dell Technologies (DELL), MongoDB (MDB) and others.

Spot gold was down 2.1% at $4,344.51 per troy ounce, while silver dropped 2.4% to $65.40 per ounce.

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