Dow falls 600 points as oil rises and Fed rate hike bets strengthen

U.S. equities retreated Tuesday amid a confluence of geopolitical and monetary headwinds. Middle East tensions lifted crude prices, adding to inflation concerns just as markets await fresh economic data that could shape the Fed's upcoming rate decision. The combination of rising energy costs and expectations for potential rate hikes created a risk-off sentiment that weighed on major indices.

The market pullback reflects investor anxiety over dual pressures: external supply shocks from regional instability and domestic monetary tightening that could be signaled through inflation readings. With the Fed's next meeting looming, traders are reassessing positions ahead of what could be a hawkish-leaning week for fixed income.

• Middle East tensions drove oil higher, intensifying inflation fears alongside an upcoming Fed decision.
• Investors are positioning defensively as economic data and rate-hike probability take center stage.
• The selloff underscores sensitivity to both geopolitical risk and monetary policy timing.