U.S. stocks closed lower on Tuesday in the first trading session after the Labor Day holiday. The Dow Jones Industrial Average fell 1.18% to 52,786.07, a drop of more than 600 points. The S&P 500 declined 0.58% to 7,673.52, and the Nasdaq slipped 0.32% to 26,421.410.
The report said the market was weighed down by a combination of geopolitical risk and inflation concerns. U.S. forces struck targets near Iran’s Kharg Island, and the targets included an Iranian oil tanker. At the same time, multiple energy and public utility facilities in Saudi Arabia were attacked by Yemen’s Houthi forces. Fires broke out at several sites, and some operations were temporarily suspended.
Oil climbs as tensions escalate
Iran’s Revolutionary Guard Navy said vessels linked to the incident would become targets in response to what it described as a U.S. attack on an Iranian oil tanker.
International oil prices extended gains. Brent crude futures settled up 2.46% at $99.39 a barrel and briefly approached $100 during the session. WTI crude futures rose 1.67% to $94.25 a barrel.
Semiconductor shares outperform
Chip stocks moved against the broader market. Intel surged 9.05% after reports that the company plans to raise PC CPU prices by 10%. AMD gained nearly 6%, and the Philadelphia Semiconductor Index rose 1.3%.
Optical communications names also rallied sharply. Lumentum climbed more than 11%, while Corning rose more than 7%.
Among the so-called Magnificent Seven group, Tesla led with a 3.98% gain. Nvidia fell 2.01%, and Apple dropped more than 1%. The Wind U.S. Tech Giants Index fell 0.74%.
Most Chinese stocks listed in the U.S. also moved lower, with the Nasdaq Golden Dragon China Index down 1.7%.
Treasury yields rise ahead of CPI
Higher oil prices revived inflation concerns and pushed Treasury yields higher. The 2-year Treasury yield rose 2.72 basis points to 4.394%, while the 10-year Treasury yield traded near 4.79%.
Traders are now focused on this week’s U.S. August CPI release. The report noted that Federal Reserve Governor Christopher Waller had previously said the August inflation data would "greatly influence" his vote at the September policy meeting.
What markets are watching next
- U.S. Treasury long-dated bond buyback: the buyback announcement is expected at 11 p.m. tonight. The securities involved are outstanding Treasuries with maturities of 10 to 20 years. Morgan Stanley estimates that $10 billion is roughly the current upper limit of the Treasury’s operation, and the size of the buyback could directly affect long-end rates.
- Apple’s fall product launch: the event is scheduled for 1 a.m. Beijing time on Sept. 10. New CEO Ternus is set to make his debut, and the market is watching whether the first foldable iPhone Ultra will be officially unveiled.