US military strikes on targets near Kharg Island, including Iranian oil tankers, sent shockwaves through global markets on Tuesday. In response, Iran's Revolutionary Guard Navy has declared that vessels linked to the attacks will now be considered legitimate targets, escalating the risk of a broader conflict. Wall Street also kept a close watch on rising trade tensions between the US and Canada, which compounded investor anxiety and drove a broad selloff.
The Dow Jones Industrial Average fell 1.18%, while the S&P 500 declined 0.58% and the Nasdaq Composite dropped 0.32%. Among notable movers, Amgen plummeted 10.08% and HWM lost 10.70%, while Intel surged 9.05% and Qualcomm gained 3.17%. The so-called "Magnificent Seven" presented a mixed picture: Tesla climbed 3.98%, Nvidia fell 2.01%, Meta Platforms slipped 0.53%, Apple dropped 1.17%, Google edged down 0.03%, Amazon declined 0.60%, and Microsoft lost 1.15%.
Oil prices surged again on Tuesday, with West Texas Intermediate crude for October delivery rising $1.55 to settle at $93.03 per barrel, a 1.69% gain. Brent crude for November delivery added 92 cents to close at $97.92 per barrel, up 0.95%. Over the past month, crude prices have spiked dramatically amid the sustained US-Iran conflict, and traders now worry that elevated energy costs could fan inflation and push Treasury yields higher.
Adding further strain to supply, Saudi Arabia's energy ministry reported that multiple energy and utility facilities were hit by attacks from Yemen's Houthi rebels, causing fires and temporarily disrupting operations at several sites. The ministry said it is working to secure the facilities, protect personnel, and maintain business continuity. Saudi-led coalition forces earlier stated that the Houthi assault targeted civilian and economic infrastructure in Abha, Khamis Mushait, Najran, and Jizan, injuring 73 people.
Yields on the benchmark 10-year Treasury note climbed to their highest level since November 2023 last week, while the 2-year yield hit levels not seen since January 2025. Dan Coatsworth, market analyst at AJ Bell, noted in a Tuesday morning report that Brent has now touched a six-week high. He added that while there are reports of a possible agreement between Iran and Oman on partial shipping access through the Strait of Hormuz, it actually highlights Tehran's control over the crucial waterway. Investors are now focused on US inflation data due later this week to see if rising oil prices are beginning to feed into broader price pressures.
Ed Yardeni, president of Yardeni Research, questioned whether equity markets can maintain their current composure given the flurry of central bank meetings in the coming weeks. With global bond yields moving higher in tandem, the key issue, he said, is whether this reflects stronger-than-expected growth, inflation running above forecasts, or a sign that a fiscal debt crisis is brewing.
Copper prices on both the London and New York exchanges hit fresh record highs on Tuesday, driven by supply-demand imbalances and tariff anxieties. Analysts attribute the rally to robust long-term demand expectations from data center construction, grid upgrades, electric vehicles, and renewable energy projects, while output from major producing nations has declined, squeezing supply.
The Federal Reserve is set to hold its monetary policy meeting next week. According to the CME FedWatch tool, traders currently price in a 60% probability of a 25-basis-point rate hike following the meeting. Producer and consumer price inflation data, due Thursday and Friday respectively, could shift those odds, as could another jump in oil prices stemming from ongoing Middle East tensions. Meanwhile, the US-Canada trade dispute escalated further as retaliatory tariffs on approximately $20 billion worth of American goods took effect Tuesday. President Trump stated on Monday that unless Bombardier moves its production to the US, the Canadian aerospace company's products will not be allowed for sale in the United States.
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