(Updates with index/price moves and geopolitical news from the first paragraph.)
US equity indexes fell as the 10-year Treasury yield touched a 19-year high and crude oil extended gains, reflecting a strong likelihood of an interest-rate increase this week amid a worsening Iran war.
The Nasdaq Composite fell 0.9% to 25,956.1, the S&P 500 declined 0.5% to 7,579.5, and the Dow Jones Industrial Average dropped 0.7% to 52,059.7 ahead of Tuesday's close. All sectors except energy and materials slid, with consumer discretionary leading decliners.
The Federal Reserve kicked off its two-day monetary policy meeting on Tuesday. Ahead of the Fed's announcements on Wednesday, interest rate traders are now pricing in a 95% probability that the central bank will raise its target rate by 25 basis points, up from 33% a month ago, according to the CME FedWatch tool.
Most US Treasury yields rose. The 10-year yield jumped 3.9 basis points to 5%, earlier touching 5.04%, the highest since 2007. The two-year yield advanced 3.1 basis points to 4.67%.
Saudi Arabia issued security alerts over a range of territory on Tuesday, including in the holy city of Mecca and the second-largest city, Jeddah, following a week of attacks from Iran-aligned fighters that have drawn it deeper into the Middle East war, Reuters reported. The Iran-aligned Houthis in Yemen have carried out attacks on Saudi Arabia over the past week, including strikes on an air base on Monday, the news agency said.
The front-month US West Texas Intermediate crude oil contract surged 4.2% to $105.64 per barrel, and the global benchmark North Sea Brent jumped 2.6% to $108.41 per barrel.