NEW YORK — U.S. stocks resumed trading and fell on Tuesday after the three-day long weekend. The latest fighting in the Iran war pushed oil prices higher, putting pressure on the market.
The S&P 500 index fell 0.6%. The Dow Jones Industrial Average dropped 628 points, or 1.2%; the Nasdaq Composite Index declined 0.3%.
Rising oil prices weighed on stocks. Brent crude oil once climbed to $99.46 per barrel before settling at $97.92, a 0.9% increase. The intensifying conflict in the Middle East continues to restrict global oil supply, with the price of Brent crude also rising steadily from around $72 in early July.
Higher oil prices have heightened market concerns about high inflation, which is putting pressure on U.S. consumers and businesses. This also makes two reports to be released later this week more important. The U.S. government will release the August producer inflation report on Thursday, with economists expecting the growth rate to accelerate from 4.7% in July to 5.4%.
The more closely watched consumer inflation report will be released on Friday, showing how much the cost of groceries, clothing, and other living expenses has increased compared to a year ago. Economists expect the inflation rate to drop slightly from 3.4% in July to 3.3%, still significantly above the Federal Reserve's 2% target.
This week's inflation data will be the final update before the Fed's meeting next week decides whether to cut, raise, or maintain interest rates. The Fed's traditional approach to high inflation is to raise the benchmark interest rate. Subsequently, rising rates transmit to other bond markets, increasing borrowing costs for businesses and individuals, slowing the overall economy, depressing investment prices, and hopefully controlling inflation.
However, U.S. President Donald Trump has been lobbying for lower interest rates, which could further stimulate the economy and inflation. The Fed's new chairman, Kevin Warsh, has stated he wants to reduce clues provided to financial markets about short-term interest rate plans.
Data from CME Group shows traders are currently betting on a nearly 60% probability of a Fed rate hike when the September 16th meeting concludes.
In the bond market, the yield on the 10-year U.S. Treasury note rose from 4.78% to 4.79%, close to its highest level since the fall of 2023.
Higher U.S. Treasury yields put greater pressure on companies, as they need to achieve higher profit growth to drive stock prices up.
On Wall Street, Boston Scientific fell 5.9%. The company stated that a cybersecurity incident this summer caused a network outage, which may prevent it from meeting sales and profit forecasts for the third quarter and the full year 2026. While the company expects to recover some revenue as global operations continue to resume, customer orders are fulfilled, and remaining backlogs are gradually reduced, the full impact remains unclear.
Swiss pharmaceutical company Novartis, listed in the U.S., saw its stock price plunge 13.9%. This followed the company's announcement of negative progress in a study on a therapy for patients with Type 1 Myotonic Dystrophy, a neuromuscular disorder.
Qualcomm rose 3.2%, helping to limit the market's decline. The company announced it will collaborate with Amazon to build a large-scale AI data center. The agreement also grants Amazon the right to acquire up to 25 million Qualcomm shares at $161.26 per share.
In overseas markets, Japan's Nikkei 225 index fell 1.7%. Shares of major exporters declined as the Japanese yen continued to strengthen against the U.S. dollar.
A stronger yen reduces the value that exporters like Toyota Motor and Panasonic Holdings receive when converting their dollar sales revenue back into yen. The Bank of Japan is also scheduled to hold an interest rate meeting next week, and market expectations for a possible rate hike are heating up, which could further push the yen higher.
In the Chinese market, Hong Kong stocks fell 0.4%, while Shanghai stocks rose 0.2%. This followed the world's second-largest economy reporting a 25% year-on-year increase in August exports, driven primarily by strong demand for automobiles and high-tech products.
