U.S. stocks fell for the third straight session as military strikes around the Strait of Hormuz caused a spike in oil futures and bond yields.

The Dow Jones Industrial Average fell 419.02 points, or 0.79%, to 52766.88. The S&P 500 shed 54.67 points, or 0.71%, to 7631.47 and the tech-heavy Nasdaq Composite dropped 271.11 points, or 1.03%, to 26099.77.

The yield on the policy-sensitive two-year Treasury rose 0.044 percentage point to 4.392%, the highest close since January 2025. The yield on the 10-year Treasury note rose 0.038 percentage point to 4.795%, also a 20-month high. The 30-year bond yield rose 0.018 percentage point to 5.266%, its fifth consecutive gain and within 5 basis points of 19-year highs.

The Treasury selloff was part of a worldwide rout in bond markets, which saw Japan's 10-year bond yield touch 3% for the first time since 1996 in overnight trading. Similarly, the U.K's 30-year bond yield hit the highest level since 1998, and German and French yields hit their own multiyear highs. Rising yields will drive up the cost of borrowing for households and businesses in addition to government debt.

"It's a pretty strong trend and it's global," said Lorenzo Di Mattia, founder and chief investment officer at hedge-fund firm Sibilla Capital. If sovereign-bond yields continue to rise, they will likely continue to weigh on equity markets, Di Mattia said.

A major factor in the global surge in bond yields is energy inflation. Gains in oil futures have been accentuated in some refined products. Nymex-traded diesel futures have more than doubled for the year to date.

Oil rose $4.46 per barrel, or 5.20% to $90.22 a barrel in New York after reports that two oil tankers carrying Saudi oil were hit by rockets and other projectiles in the Strait of Hormuz. Later, the U.S. launched attacks on Iran, the second round of bombing following a one-month hiatus.

The U.S. dollar rose as traders adjusted inflation and rate expectations. Rate-sensitive gold futures fell $83.10, or 1.9% to $4348 a troy ounce, trimming 2026 gains to a mere 0.5%.

Shares of major fuel consumers such as cruise lines and airlines fell sharply. After losses in recent sessions Carnival and Norwegian Cruise Line have each fallen by more than 30% from their 2026 highs.

Growth statistics continue to point to an economy that's chugging along as the data-center boom offsets slowing activity in the housing market and elsewhere. The Institute for Supply Management's purchasing managers index was 54.6 in August compared with 55.6 in July, as factory activity continued to expand, albeit at a slower rate. U.S. job openings improved while hiring ticked down as job growth slowed in July, according to the Labor Department's monthly job openings and labor turnover survey.

The AI infrastructure build out race continued for another day.

SB Energy, an AI infrastructure firm backed by SoftBank registered for an initial public offering.

Geothermal company Fervo Energy struck a deal to sell power to Alphabet's Google from a Utah project that it plans to turn into the world's largest enhanced geothermal facility.

Nvidia shares fell 1.5% to $217.44 even after AI firm Anthropic signed a cloud-computing deal worth $35 billion with Lambda, a data-center hardware firm backed by the chip maker, with Nvidia itself holding the lease on the data center.

While tech companies continue their AI investments, some retail investors are taking a step back. U.S. indexes of chip makers and some tech-oriented overseas stock markets such as Korea's Kospi are already in bear-market territory.

Apple shares rose 2.6% to $325.13 as Chief Executive Tim Cook concluded 15 years as the company's leader, handing the reins to hardware executive John Ternus. A court fight between Apple and OpenAI about hardware trade secrets looks set to intensify.

Novartis rose 6% to $161.25 after the Swiss drug maker's multiple-sclerosis product candidate showed promise in two late-stage clinical trials.