Dow drops 332 points as oil jumps and Treasury yields hit fresh 16-year highs

• Stocks fell Wednesday as escalating tensions in the Middle East pushed oil up.
• Treasury yields also pressure equities, with the 10-year touching a fresh 16-year high.

US stocks tumbled Wednesday as oil prices jumped and Treasury yields swung up to highs not seen since 2007.

The Dow Jones Industrial Average fell more than 300 points, while the S&P 500 dropped about 1.3%. The tech-heavy Nasdaq tumbled 1.6%.

Tensions between Israel and Hamas were ratcheted up after a hospital in the Gaza Strip exploded, killing an estimated 500 Palestinians. With both parties throwing blame on the other, the event dims hopes that the conflict will soon de-escalate.

Iran called for an embargo on Israel oil, and crude prices climbed mid-day, before trimming gains. If the conflict grows to involve other Middle Eastern states, oil prices are expected to rise, with one estimate forecasting Brent to go as high as $150 a barrel.

Meanwhile, Treasurys resumed their sell-off, causing bond yields to hit fresh records. Most notably, the 30-year rate broke through the 5% barrier, with the 10-year note following closely behind, touching 4.9% for the first time since 2007.

"Financial markets, keenly focused on the path of the 10-year Treasury yield, are increasingly concerned that the next move higher could be on the cusp of 5%, and whether the broader economy is equipped to assimilate the higher cost of capital," Quincy Krosby, Chief Global Strategist for LPL Financial, said.

Wednesday did see some demand return for Treasurys, with the latest auction of 20-year bonds drawing more interest than other recent sales of long-dated bonds. This follows after buyers pulled back from last year's auction, causing concern of a more widespread trend.

Meanwhile, earnings reports continued through the day, with Tesla and Netflix set to report after the closing bell.

Notable earnings earlier in the day included Morgan Stanley, whose profits came in below estimates, and United Airlines, which fell 8% on warnings of elevated fuel prices and risks from the Israel-Hamas conflict.

Here's where US indexes stood at the 4:00 p.m. closing bell on Wednesday:

• S&P 500: 4,314.60, down 1.34%

• Dow Jones Industrial Average: 33,665.35, down 0.98% (-332.30 points)

• Nasdaq Composite: 13,314.30, down 1.62%

Here's what else is going on:

• Expect a spot Bitcoin ETF this year, Mike Novogratz says, as the SEC's opposition makes "intellectually zero sense."
• China's Country Garden developer reportedly missed a final bond payment deadline.
• Economists now see chances of a recession below 50%. Here's how consensus has shifted over time.
• Stock market gains may be coming, as a reliable buy signal just flashed through markets.
• Jeffrey Gundlach says long-dated Treasurys are worth buying, with bond prices set to rise in a 2024 recession.

In commodities, bonds, and crypto:

• West Texas Intermediate climbed 1.87% higher to $88.28 a barrel. Brent crude, the international benchmark, rose 1.7% to $91.39 a barrel.
• Gold rose 1.47% to $1,964.10 per ounce.
• The 10-year Treasury yield increased six basis points to 4.908%.
• Bitcoin slipped 0.26% to $28,274.