The S&P 500 slumped on Tuesday to kick off the first trading day of a holiday-shortened week, weighed down by a jump in crude oil prices..

The S&P 500 slumped on Tuesday to kick off the first trading day of a holiday-shortened week, weighed down by a jump in crude oil prices.

The Dow Jones Industrial Average

 lost 110 points, or 0.3%. The S&P 500

 dipped about 0.3%, while the Nasdaq Composite

 hovered near the flatline.

Oil prices rose after Saudi Arabia extended its 1-million-barrels per day voluntary oil production cuts. West Texas Intermediate futures popped 2% to trade above $87 per barrel, reaching their highest levels since November.

The news lifted energy stocks, with the S&P 500 sector last up about 1%. Shares of Halliburton

, Occidental Petroleum

 and EOG Resources

 each added about 3%. The uptick in oil pressured airline and cruise stocks, with American Airlines

, United Airlines

, Delta Air Lines

 and Carnival

 down more than 2% each during afternoon trading.

Treasury yields also popped, straining risk assets. The yield on the 10-year Treasury surged more than 8 basis points to 4.258%.

“If you have oil prices moving up that could be inflationary,” said Keith Lerner, co-chief investment officer at Truist Advisory Services. “That just makes the Fed’s job harder. There’s already a fine line between the Fed landing the soft landing that people are hoping for” and an economic slowdown.

Another hard-hit area included small-and midcap stocks, with the S&P Small Cap 600 down 2.7%. The S&P Midcap 400 sank 1.9% and the Russell 2000′s slumped 1.8%.

Recession odds falling?

Over the extended holiday weekend, Goldman Sachs cut its recession odds to 15% and said it anticipates the Federal Reserve skipping a rate hike at its policy meeting later this month.

While this could be seen as good news for the market, investors have to contend with seasonal effect in September, historically the weakest month for equities.

To be sure, some technical indicators have given investors hope in recent days. In a sign of positive short-term momentum, the major indexes broke above their respective 50-day moving averages last week.

Meanwhile, the Dow and the Nasdaq are coming off their best weekly performances since July, while the S&P 500 registered its best week since June.

“While history may not repeat, bullish momentum this year suggests September may not be as bad as the headlines suggest,” said Adam Turnquist, chief technical strategist at LPL Financial.