The Dow Jones Industrial Average tumbled 536 points, or 1%, on Tuesday as oil prices climbed for a sixth straight day following a U.S.-Iran exchange of strikes over the weekend. Investors are also bracing for inflation data due later this week ahead of the Federal Reserve's Sept. 15-16 meeting.
Stocks dropped Tuesday to start a shortened trading week, with the Dow Jones Industrial Average tumbling 536 points, or 1%. The S&P 500 fell 0.3%, while the Nasdaq Composite dipped 0.1%. U.S. markets had been closed Monday for the Labor Day holiday.
Oil's six-day rally weighs on stocks
Stocks came under pressure as oil prices kept rising. West Texas Intermediate futures climbed for a sixth straight day — the longest such streak since a seven-day run in March — after the U.S. and Iran exchanged strikes over the weekend. Brent crude last hovered around $98 a barrel.
Inflation reading looms before Fed meeting
The energy-price spike sharpens investor focus on inflation data due later this week, which will likely shape expectations for monetary policy ahead of the Federal Reserve's meeting next week. The producer price index and consumer price index for August are due out Thursday and Friday, respectively.
Fed funds futures were last pricing in a 58% chance the central bank will hike rates by a quarter-percentage point after the Sept. 15-16 meeting, according to the CME Group's FedWatch tool. According to Mark Hackett, chief market strategist at Nationwide: "that's going to really make it difficult for them not to hike rates" if CPI surprises to the upside.
The spike in energy prices also put upward pressure on Treasury yields. The benchmark 10-year Treasury note yield last week climbed to its highest level since November 2023, while the shorter-term 2-year note yield scaled to a January 2025 high.
Traders also face renewed trade tensions between the U.S. and Canada. Retaliatory tariffs from Canada on about $20 billion of U.S. goods took effect Tuesday, a day after President Trump said Canadian planemaker Bombardier can't sell in the U.S. unless it builds its products there.
Source: CNBC
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