Dow Tanks 500 Points and the 10-Year Yield Just Hit a Level Not Seen Since 2007

TLDR

The Dow Jones Industrial Average fell 500 points, or about 1%, on Tuesday The 10-year Treasury yield briefly rose above 5% for the first time since 2007 WTI crude oil hit $103 a barrel, with Brent crude at around $102 The Federal Reserve is expected to raise interest rates at its Wednesday meeting Chip stocks bucked the trend, with the iShares Semiconductor ETF rising 1%

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US stocks fell Tuesday as rising oil prices and surging bond yields rattled investors ahead of the Federal Reserve’s rate decision on Wednesday.

The Dow Jones Industrial Average dropped 500 points, or roughly 1%. The S&P 500 fell 0.58% and the Nasdaq Composite dropped around 0.83%.

E-Mini S&P 500 Sep 26 (ES=F)

Bond Yields Hit Highest Level Since 2007

The 10-year Treasury yield briefly crossed 5% overnight, a level not seen since 2007. While it pulled back slightly, the move spooked investors already on edge about inflation and government spending.

Rising yields make borrowing more expensive for companies and consumers. They also tend to make stocks less attractive compared to bonds.

Oil prices added to the pressure. WTI crude rose about 1.7% to $103 a barrel. Brent crude was trading near $102. Prices have stayed elevated after Saudi Arabia shut its East-West pipeline and Houthi forces launched fresh attacks in the Middle East.

Wall Street is watching oil closely because higher energy costs can push inflation higher. That could pressure the Fed to keep rates elevated for longer.

Fed Rate Decision Looms

The Federal Open Market Committee began its September meeting on Tuesday. Traders are widely expecting a rate hike on Wednesday.

According to the CME FedWatch Tool, odds of a half-point or more in rate increases through year-end stood at 79%.

JUST IN 🚨: The odds of a rate hike this week have soared above 92% pic.twitter.com/1nQgeouwh2

— Barchart (@Barchart) September 14, 2026

Fed Chairman Kevin Warsh is scheduled to hold a press conference after the decision. Investors will also get a look at the Fed’s dot-plot, which shows where policymakers expect rates to go.

Sentiment was also affected by an essay from Anthropic CEO Dario Amodei on AI safety concerns. The piece weighed on the broader market mood following Monday’s AI-driven losses.

Not everything fell. Chip stocks held up. The iShares Semiconductor ETF rose 1% after sliding on Monday. The Invesco S&P 500 Equal Weight ETF was down 0.6%, showing broader weakness across the market.

On the earnings front, Forgent Power Solutions and Vera Bradley reported results Tuesday, though neither moved markets in a major way.

The Dow closed the session down 510 points at 51,910. The S&P 500 settled at 7,575 and the Nasdaq finished at 25,968.

Markets will be focused on the Fed’s next move Wednesday and whether Chairman Warsh signals any pause in rate hikes going forward.

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