Wall Street falls as US-Iran tensions flare, 30-year Treasury yield hits 19-year high

All three major US stock indexes fell Monday as escalating tensions between Washington and Tehran sent oil prices sharply higher and pushed long-term Treasury yields to their highest level in 19 years. Concerns over a disruption to Middle East crude supply and a renewed spread of inflation weighed on investor sentiment, though semiconductor stocks held up on positive AI-related news.

The Dow Jones Industrial Average closed down 272.63 points, or 0.51 percent, at 53,459.78. The S&P 500 fell 40.70 points, or 0.52 percent, to 7,745.06, while the NASDAQ Composite dropped 84.25 points, or 0.32 percent, to 26,644.91.

Geopolitical risk in the Middle East and concerns about slowing consumer activity weighed on markets. The 60-day negotiating deadline under the US-Iran ceasefire MOU expired without an extension, deepening fears of an oil supply disruption as tensions between the two countries intensified.

President Donald Trump said Iran "must raise the white flag of surrender" and called preventing Iran from acquiring nuclear weapons America's top priority. Trump also dismissed any intention to extend the MOU with Iran.

Foreign media also reported that a senior Iranian official said the country would shift from a defensive posture to a full offensive if diplomatic talks with the United States collapsed.

Brent crude for October delivery settled up 2.65 percent at $90.87 per barrel, while West Texas Intermediate for September delivery rose 2.55 percent to $84.50 per barrel.

Rising oil prices stoked inflation fears and rattled the bond market. The yield on the 30-year US Treasury — a key benchmark for bond markets — soared to 5.31 percent, its highest level since 2007. The 10-year yield rose 3 basis points to 4.73 percent. Gold strengthened on safe-haven demand, trading above $4,470 per ounce.

Markets were also in wait-and-see mode as the aftereffects of July's retail sales and employment data lingered, with investors looking ahead to earnings reports this week from major retailers including Home Depot and Walmart.

AI-related news, however, cushioned some of the downside pressure. Anthropic said its most recent quarterly sales surged more than 14 times compared with the same period last year and that it had swung to an operating profit.

News that Nvidia plans to invest up to $10.5 billion to build a large-scale data center in Ohio for OpenAI to lease helped lift the Philadelphia Semiconductor Index by 1.6 percent. SK Hynix's American depositary receipts jumped 3.04 percent on expectations of robust demand for AI chips.