• Wall Street faces a major sell-off as stock indices plummet due to rising oil prices.
• The Dow dropped over 900 points amid fears of prolonged tensions with Iran.
• Oil prices surged close to $100 per barrel, raising inflationary concerns.
• Airline stocks significantly declined due to fears over increased fuel costs.

A significant global sell-off hit Wall Street on Tuesday, primarily driven by escalating tensions related to Iran, which raised fears over prolonged economic disruption. The S&P 500 index fell by 1.8%, and the Dow Jones Industrial Average dropped 907 points, or 1.9%. The Nasdaq Composite also decreased by 2.1%, reflecting widespread investor anxiety. This downturn followed a previous day where stocks had surprisingly rallied despite early losses, due largely to oil prices remaining stable, which changed drastically as Brent crude approached $85 per barrel, compared to just under $70 a week earlier. This sell-off coincided with reports of Iran striking the U.S. embassy in Saudi Arabia, further exacerbating fears related to oil supply disruptions in critical areas like the Strait of Hormuz, through which about 20% of the world's oil passes according to SCMP, India Times, and LA Times.

The increase in oil prices has significant implications for inflation, which was already a concern for the economy. The average price of gasoline in the U.S. increased by 11 cents overnight to approximately $3.11 per gallon, as reported by AAA. Investors are particularly worried about the impact on American households and businesses, as rising fuel costs could exacerbate existing inflation. Financial markets also reacted to higher oil prices with bond yields climbing, where the yield on the 10-year Treasury reached 4.10%. Higher yields typically indicate increasing borrowing costs for households and businesses, affecting various sectors including mortgages and corporate bonds, according to SCMP, India Times, and LA Times.

SCMP, India Times, and LA Times.