Treasury Yields Hit The Highest Level In Almost 20 Years And Oil Kept Climbing. Stocks Fell Again.

Stocks fell again on Tuesday as bond yields and oil prices kept climbing amid a continued selloff of U.S. debt and hostilities in the Middle East.

The S&P 500 dropped 0.45%, while the Dow Jones Industrial Average did so 0.63%. The tech-heavy Nasdaq Composite underperformed, decreasing by 0.78%.

The benchmark 10-yield Treasury note rose on Tuesday to the highest level since 2007. The note reached 5.041% early in the session before pairing gains. It stood at 5.006% at 4:21 p.m. ET.

Odds of a Fed rate hike are above 90% on the day before the policy decision, according to the CME Group's FedWatch tool, clocking in at 92.3% on Tuesday afternoon.

Yields have continued to climb even though Treasury Secretary Scott Bessent said last week that the department will buy back $6 billion of longer-dated government debt, triple the usual amount.

A recent report noted that the Treasury could dip into its $1 trillion General Account (TGA) to help fund its plan to increase buyback of government bonds. The TGA will allow the Treasury with a large chest to fund the strategy and influence long-term bond yields

Oil prices climbed on Tuesday too as clashes in the Middle East continue to escalate, particularly between Yemen's Houthi rebels and Saudi Arabia.

. Brent crude, the international benchmark, gained 2.76% and stood at $108.60 per barrel at 4:23 p.m. ET, while West Texas Intermediate, the U.S. benchmark, increased by 4.45% and clocked in at $105.90 per barrel at the same time.

A Houthi official said that three people were killed and two more injured as a result of Saudi strikes in the country. The Iran-backed group has recently made substantial gains in the Red Sea and strengthened its embargo on Saudi oil transiting the waterway. Forces also struck Riyadh's key East-West pipeline after sustaining multiple attacks last Friday, further threatening its oil exports.

Energy Secretary Chris Wright said repairing the pipeline will take days, rather than weeks. Speaking to CNBC, Wright said "this will be a brief and temporary interruption" that will be "measured in days."

Riyahd's ability to reopen the pipeline will be key for the already strained global energy industry, considering that about 4% of the global oil supply flows through it.

Wright's assessment differs from a source familiar with the matter who earlier this week told Reuters that that Riyadh could take up to six weeks to fix the pipeline if it doesn't get hit again. Another estimate claimed that the work could take less and partial pumping could resume as well.