Wall Street is keeping a close eye on the conflict between the US and Iran, as well as the escalating trade tensions between the US and Canada. The Dow Jones Industrial Average fell 0.77%, and the S&P 500 slipped 0.09%. The Nasdaq managed a 0.09% gain, supported by a rally in chip stocks. Amgen dropped 6.70%, while Howmet Aerospace fell 6.31%. On the upside, Intel jumped 7.03%, and Qualcomm advanced 6.31%. Among the "Magnificent Seven," Tesla rose 1.35%, Nvidia gained 1.25%, and Meta Platforms edged up 0.24%. Apple declined 0.78%, Alphabet lost 0.92%, Amazon dropped 1.06%, and Microsoft fell 1.26%. US markets had been closed on Monday for the Labor Day holiday.
With the US and Iran exchanging strikes over the weekend, international oil prices climbed for a third consecutive session, putting pressure on equities. Brent crude futures gained 2.3% to reach $99.22 per barrel, while West Texas Intermediate (WTI) crude advanced 3.3% to $94.54 per barrel. Over the past month, crude prices have surged dramatically amid the ongoing US-Iran war. Traders are now worried that elevated energy costs could push inflation higher, which in turn has driven Treasury yields upward. According to a statement from the Saudi Energy Ministry today, multiple energy and utility facilities in the country came under attack from Yemen's Houthi rebels, sparking fires at several locations and causing temporary disruptions to some operations. The ministry noted it is working to ensure the safety of facilities and personnel while maintaining operational continuity. Earlier today, the Saudi-led coalition in Yemen reported that Houthi attacks targeted civilian and economic sites in Abha, Khamis Mushait, Najran, and Jizan, injuring 73 people.
Where the market stands
The benchmark 10-year Treasury yield climbed to its highest level since November 2023 last week, while the short-term 2-year yield hit a fresh high not seen since January 2025. Dan Coatsworth, market director at AJ Bell, said in a research note on Tuesday morning: "Brent crude has now touched a six-week high. Reports of a potential deal between Iran and Oman on partial shipping traffic through the Strait of Hormuz only underscore how much control Tehran has over this crucial waterway. Investors will be closely watching US inflation data due later this week to determine whether rising oil prices are starting to feed into broader inflationary pressures." Ed Yardeni, president of Yardeni Research, commented: "Several central bank policy meetings in the coming weeks will test whether the stock market can maintain its current composure. With global bond yields rising in tandem, the key question is whether this stems from stronger-than-expected economic growth, higher-than-anticipated inflation, or a sign that a fiscal debt crisis is on the horizon."
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Driven by supply-demand imbalances and tariff concerns, copper prices in both London and New York hit record highs today. Analysts attribute this rally to expectations of robust long-term demand from data center construction, power grid upgrades, electric vehicles, and renewable energy projects. At the same time, output from major copper-producing nations has declined, putting further strain on supply. The Federal Reserve is scheduled to hold its monetary policy meeting next week. According to the CME FedWatch tool, traders are pricing in a 60% probability of a 25-basis-point rate hike following the meeting. Producer price inflation and consumer price inflation data will be released on Thursday and Friday this week, respectively, and could shift those expectations. Meanwhile, escalating tensions in the Middle East have triggered another jump in oil prices, which could also influence rate hike projections. In parallel, US-Canada trade frictions are heating up again. Canada's retaliatory tariffs on approximately $20 billion worth of American goods took effect on Tuesday. Over the weekend, President Trump stated that products from Canadian aerospace firm Bombardier will not be allowed for sale in the US unless the company relocates its production to American soil.
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