Back to Work Blues. The stock market wasn't happy coming back from the long weekend. All three major indexes dropped on Tuesday as geopolitics took center stage again.
The Dow Jones Industrial Average slipped 1.2%, or 626 points. The S&P 500 dropped 0.6%. The Nasdaq Composite dipped 0.3%.
It felt like markets were being buffeted from all directions today. The VIX index, Wall Street's fear gauge, jumped about 2% to 15.6.
It comes down to the "usual suspects," notes Joe Mazzola, head trading and derivatives strategist at Charles Schwab: oil, Treasuries, and tariffs.
Reports that Yemen's Houthis attacked Saudi Arabian oil facilities caused oil prices to spike today. Brent Crude futures rose above $98 per barrel, just skimming the $100-mark in intraday trading earlier this morning, while West Texas Intermediary topped $93 per barrel.
"Escalating geopolitical tensions in the Middle East are dampening investor sentiment on Wall Street, as rising crude prices place inflation risk at the forefront of the fixed-income conversation, just as critical PPI and CPI reports are scheduled to be released on Thursday and Friday," wrote José Torres at Interactive Brokers.
Rising Treasury yields weren't helping matters. Yields for 10-year Treasury notes ticked up to 4.795% as the Treasury Department prepares to hold its first major auction since Secretary Scott Bessent's August announcement that the department would purchase more bonds from investors than previously communicated. The Treasury is set to auction $39 billion worth of 10-year bonds on Wednesday and $22 billion worth of 30-year bonds on Thursday. Markets will be closely tracking how investors react to the issuance.
"Weak demand despite high yields might signal investors waiting to see if the Federal Reserve raises rates next week, with chances now at 60%, according to the CME FedWatch Tool," Mazzola writes. "The last round of auctions drew mixed enthusiasm."
And if there wasn't enough going on, Canada's retaliatory tariffs on a little over $20 billion worth of U.S. goods went into effect today, marking the latest escalation in a trade war that could cause serious damage to both the U.S. and Canadian economies.
"No one wins a trade war, there are only losers," notes Stephen Evans, chief investment officer at Pave Finance. "When you look behind the tough-guy act of trying to secure better deals, these tariff wars simply become a game of trying to make the other person lose more than you. Historically, however, the real losers are always the consumers, who end up paying inflated prices for goods and services."
Is it too late to turn my out of office reply back on?
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Apple's Big Day
September's here, which means it's time to go Apple picking.
The company is scheduled to hold its annual iPhone launch event tomorrow, and tech watchers are anxiously awaiting details on the new foldable iPhone.
Bulls argue this could be a "category-defining launch," while skeptics worry the design will be a niche product that fails to drive significant top or bottom-line growth, writes MoffettNathanson analyst Craig Moffett.
Apple will also unveil the new iPhone 18 Pro and the iPhone 18 Pro Max. Analysts expect significant iPhone price increases given how much memory prices have surged in face of strong demand from the artificial intelligence buildout. Hiking prices too much risks alienating consumers, while not raising prices enough would squeeze margins.
But as my colleague, Kit Norton, reports, the iPhone event may not have a make-or-break effect on Apple's stock price:
Since 2017, Apple stock has on average declined 0.7% on the day of its iPhone launch events, according to Dow Jones Market Data. Morgan Stanley analyst Erik Woodring last week wrote that Apple stock will likely underperform on the day of the iPhone launch reflecting a "sell the news" investor mentality.
We'll see what tomorrow has in store.
The Calendar
Academy Sports & Outdoors, AeroVironment, American Eagle Outfitters, Chewy, Cooper Cos., Korn Ferry, Navan, and SailPoint release earnings tomorrow.
Apple hosts the "Surprise and shine" event at its headquarters in Cupertino, Calif.
This will be the first launch event as CEO for John Ternus, who replaced Tim Cook at the beginning of the month.
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