The 10-year Treasury yield hit a fresh high above 5%, while stocks fell in afternoon trading.

The Dow led losses in stocks, falling as much as 500 points, or 1%. The yield on the benchmark Treasury rose as high as 5.04%, its highest level since 2007, before paring gains. The move largely tracked oil prices, with Brent crude ticking 2% higher to trade at more than $108 a barrel.

The closure of a crucial crude pipeline in Saudi Arabia has rattled investors this week, sending energy prices higher and stoking fears that even tighter oil supplies could add to inflation.

Together, the moves have dialed up the pressure on the Federal Reserve ahead of tomorrow's interest-rate decision. Investors now see a 93% chance that officials hike rates by a quarter-percentage point, according to CME Group data, up from 59% a week ago.