US equity indexes fell after midday Tuesday as volatility surged after media reports said Iran launched a missile attack on Israel, sending oil and gold futures higher.
The Nasdaq Composite dropped 2.1% to 17,807.1 with the S&P 500 down 1.3% to 5,688.3, and the Dow Jones Industrial Average traded 0.7% lower at 42,029.4. Most sectors declined intraday with technology and consumer discretionary paced the declines. Energy and utilities were the sole gainers.
West Texas Intermediate crude oil surged 5.3% to $71.81 a barrel, and gold jumped 1.2% to $2,692.32 an ounce as Middle East tensions escalated. Overnight, Israel launched a "limited ground operation" in southern Lebanon targeting Iran-backed Hezbollah, CNN reported.
The CBOE Volatility Index, also known as the fear gauge for investors, surged 21% to 20.29 as geopolitical risk mounted.
Most US Treasury yields fell intraday, with the 10-year yield down 8.4 basis points to 3.72% and the two-year rate 5.3 basis points lower at 3.49%.
The US Dollar index advanced 0.6% to 101.36.
A strike by the International Longshoremen's Association began overnight, shutting down ports from Maine to Texas as workers demanded significant pay raises and protections against automation. The affected ports handle about 57% of US container volume and may disrupt supply chains ahead of the US presidential election and the holiday season.
Almost two-thirds of US trade will likely be impacted, potentially affecting the delivery of everything from fruits to alcohol, to auto parts and Christmas trees, a Stifel note said, citing reports. Estimates suggest the shutdown could cost $3.78 billion a week.
In economic news, US job openings rose to 8.04 million in August, according to the Bureau of Labor Statistics, higher than the 7.673 million expected in a survey compiled by Bloomberg and up from the 7.711 million reported in July. At the same time, hiring fell to 5.317 million from 5.416 million in July, cutting the hiring rate to 3.3% from 3.4%.
The spike is modest, and it is encouraging that the labor market is rebalancing to a state that supports stability without putting upward pressure on inflation, Jefferies said in a note.
The jobs report was a mixed bag with openings edging higher and hiring declining, which is less of a concern than it otherwise would be since layoffs remain low, Oxford Economics said in a note. While the house view is for another 25 basis-point interest-rate cut for November, the JOLTS data "probably isn't enough to change our forecast to a 50 bps cut, but we see the risks as heavily tilted in that direction," according to the note.
The Institute for Supply Management's US manufacturing index was unchanged in September from the 47.2 reading in August, compared with expectations for an increase to 47.5 in a survey compiled by Bloomberg.
In company news, APA Corp. (APA) said its subsidiary reached a "positive" final investment decision for the first oil development in Block 58, offshore Suriname. The estimate for total investment is $10.5 billion, and the first oil is due in 2028. APA shares rose 4.5 %, the second-biggest gain on the S&P.
