MARKET SNAPSHOT
U.S. stocks settled lower. Oil futures advanced, sending Treasury yields higher. The dollar strengthened, while gold and silver settled lower.
MARKET WRAPS EQUITIES
U.S. stocks fell for the third straight session as military strikes around the Strait of Hormuz caused a spike in oil futures and bond yields.
The Dow Jones Industrial Average fell 0.8%. The S&P 500 shed 0.7% and the tech-heavy Nasdaq Composite dropped 1.0%.
Asian indexes largely slipped earlier Tuesday.
In China, the Shanghai Composite fell 0.2%, the Shenzhen Composite declined 0.7% and the ChiNext Price Index lost 1.3%.
Stocks in Hong Kong also fell, with the Hang Seng Index declining 0.9%.
Japan's Nikkei Stock Average closed 0.1% lower, dragged down by retail and metals stocks.
In Australia, S&P/ASX 200 Benchmark Index declined 0.1%, and New Zealand's S&P/NZX 50 Index fell 0.9%.
COMMODITIES
Oil futures rose sharply as the U.S. launched new strikes against Iranian targets and President Trump warned "they will be hit at a much harder and higher level" if Iran retaliates against the latest "justified attack."
WTI settled up 5.2% at $90.22 a barrel, its highest close since July 23.
"While the escalated conflict in the Middle East continues to slow Strait of Hormuz traffic, along with the continued global tightness in diesel fuel, the near-term path of least resistance for oil prices still looks higher," Dennis Kissler of BOK Financial said in a note.
Brent rose 4.6% to $94.65 a barrel.
Gold futures fell for a third straight session as a global bond selloff pushed yields up and the flare-up in the Middle East sent crude prices higher.
The rise in oil prices raises concerns about inflation and implications for Fed interest-rate policy, particularly after Fed Chairman Kevin Warsh expressed concerns about inflation last week.
Front month gold settled down 1.9% in New York at $4,348.00 a troy ounce. Silver fell 2.4% to $64.618 a troy ounce.
TODAY'S TOP HEADLINES
Bond Yields Around the World Soar in Challenge to Government Borrowing
The global economy has a new challenge to surmount: an unruly bond market that is sending borrowing costs to their highest levels in decades.
A rout in bond markets deepened Tuesday when Japan's 10-year bond yield touched 3% for the first time since 1996. Markets in other heavily indebted nations had their own superlatives. The U.K's 30-year bond yield hit the highest level since 1998. Bond yields in Germany and France rose to their highest levels in more than a decade. The 10-year U.S. Treasury yield edged closer to 4.8%, a level last touched in January 2025.
The runup in interest rates has profound consequences for the global economy, heaping pressure on everyone from home buyers to credit-card holders and especially governments, which have borrowed heavily in recent years.
U.S. Targets Iran in Fresh Wave of Strikes
The U.S. carried out new strikes on Iranian targets Tuesday, with President Trump saying the operation was launched in retaliation for Iran's attempts to lay mines in the Strait of Hormuz and attacks targeting American servicemembers in the Middle East.
Fighting has picked back up this week as the U.S. and Iran battle over control of the strategic waterway. On Sunday, Iran fired missiles at U.S. bases after the U.S. struck Iranian launchers that it said were preparing to fire rockets carrying sea mines into the strait.
In a post on social media, Trump threatened more powerful strikes if Tehran responded.
A War That Won't End Is Complicating the Fed's Next Move
Rising oil prices are forcing central banks to decide how long they can treat the Iran war's effect on inflation as temporary. For the Federal Reserve, investors increasingly think the answer is not much longer.
Treasury yields have climbed alongside crude prices in recent days, with rates on the benchmark 10-year note reaching the highest levels of President Trump's term. Rising energy costs tend to lift yields either way: Investors expect either higher inflation or the Fed to raise rates to prevent it.
Fed governor Michael Barr said Tuesday that the central bank should begin raising rates this month unless new data show price pressures are easing.
U.S. Factory Activity Growth Slowed in August
Factory activity expanded in the U.S. at a slightly slower pace in August, according to a survey of manufacturing firms.
The ISM's purchasing managers index was 54.6 in August compared with 55.6 in July. Readings above 50 indicate a sectoral expansion. Analysts polled by The Wall Street Journal were expecting a reading of 55.3.
The new orders index expanded for the eighth consecutive month after four straight readings in contraction. Meanwhile, the prices index remained in expansion, registering the same reading as July. The employment index reading was down from July.
These Banks Are Banding Together to Launch a Stablecoin
Bank of America, Citigroup and Goldman Sachs are among a group of nearly two dozen firms teaming up to jump into the world of stablecoins, or digital tokens that can be used for cross-border transactions.
The Wall Street Journal reported last week that banks have shifted to a more defensive strategy on stablecoins, with some executives worried the tokens could rise in popularity and encroach on their businesses. Their coming stablecoin effort is intended to focus on commercial clients, the Journal reported, though use cases could vary by region and include retail markets. It will be dollar-denominated before expanding to other Group of Seven currencies.
On Tuesday, the consortium said it would move to launch the stablecoin venture in the first half of 2027. The 21 firms plan to establish a company to support the venture.
Dell Technologies Boosts Fiscal Year Outlook by $25 Billion as Server Revenue Surges
Dell Technologies lifted its full fiscal year revenue outlook by $25 billion as demand for the company's servers propelled its revenue to a record high in the second quarter.
The technology company on Tuesday said it now expects to bring in $192 billion in revenue in the current fiscal year, up from the midpoint of its previous guidance, which was $167 billion plus or minus $2 billion, and ahead of analyst expectations of $174.05 billion, according to FactSet.
The outlook includes $74 billion of revenue from AI-optimized servers, up from a previous view of $60 billion and representing threefold year-over-year growth.
Palo Alto Networks Reports Strong Earnings. The Stock Is Up.
Cybersecurity firm Palo Alto Networks reported strong fourth-quarter earnings results on Tuesday afternoon. Its shares were up about 5% in after-hours trading, after being down 5.2% in regular hours.
Adjusted earnings per share were $1.02, up from 95 cents last year, ahead of Wall Street projections of 98 cents. Earnings per share were heavily impacted by the dilution from 112 million shares issued to CyberArk shareholders when Palo Alto acquired it in February for $21 billion.
Revenue for the quarter reached $3.41 billion, better than expectations of $3.35 billion, and up 34% on the year. Sales growth was juiced by the CyberArk deal, as well as another acquisition in January, Chronosphere. Palo Alto didn't break out the contribution from the two acquisitions as it did last quarter.
David Ellison Is Promising at Least 30 Movies a Year. Hollywood Is Skeptical.
A cornerstone of Paramount Chief Executive David Ellison's argument that his planned Warner Bros. Discovery acquisition will benefit Hollywood is his promise to release at least 30 movies annually in theaters postmerger.
Many in the movie business are skeptical.
Opponents of the deal, which a coalition of 12 states have sued to block on antitrust grounds, and even some supporters note that Ellison's plan would defy a decadeslong trend of shrinking studio film slates.
Expected Major Events for Wednesday 01:30/AUS: 2Q GDP
02:00/NZ: Reserve Bank of New Zealand Monetary Policy Statement
13:00/SIN: Aug Singapore Purchasing Managers' Index (PMI)
21:00/SKA: Aug International Reserves
22:45/NZ: 2Q International Trade - Overseas Trade Indexes (Volumes / Prices)
23:00/AUS: Aug Australia Services PMI
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