(NEW YORK) -- The Dow Jones Industrial Average plunged more than 1,000 points in early trading on Tuesday as the ongoing U.S.-Israeli war with Iran prompted a major selloff.
The Dow fell 1,075 points, or 2.2%, while the S&P 500 dropped 2%. The tech-heavy Nasdaq plummeted 2%.
Investor reaction on Tuesday sharply departed from the muted response a day earlier, when the major indexes closed essentially flat.
Oil prices, meanwhile, spiked for the second consecutive day as traders feared a prolonged blockade of the Strait of Hormuz, a trading route that facilitates the transport of about one-fifth of global oil supply.
The national average price of gasoline in the U.S. soared about 11 cents overnight to $3.11, AAA said on Tuesday.
President Donald Trump announced "major combat operations" against Iran on Saturday, with daytime strikes in the joint U.S.-Israel attack targeting military and government sites, officials said.
On Sunday, Iranian state television confirmed that Ayatollah Ali Khamenei was among those killed by airstrikes in Tehran.
Iran is responding to the U.S.-Israeli operation with missile and drone attacks targeting Israel, regional U.S. bases and Gulf nations. American diplomatic facilities have also been attacked.
U.S. Treasury yields ticked higher on Tuesday, suggesting possible concern about economic instability and inflation stemming from the Iran War.
Since bonds pay a given investor a fixed amount each year, the specter of inflation risks higher prices that would eat away at those annual payouts.
In turn, bonds often become less attractive in response to economic turmoil. When demand falls, bond yields rise.
ABC News' Jon Haworth, Jack Moore, Nadine El-Bawab, David Brennan, Kevin Shalvey, Meredith Deliso and Leah Sarnoff contributed to this report.
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