Wall Street Drops on Oil-Led Inflation Jitters
On Tuesday, Wall Street ended in the red as surging crude prices amplified worries over inflation and the Federal Reserve's policy direction. The Dow Jones Industrial Average slid 628.18 points, or 1.18%, to 52,786.07, marking its second straight daily drop. The S&P 500 declined 0.58% to 7,673.52, and the Nasdaq Composite fell 0.32% to 26,421.41. Trading was absent on Monday due to the Labor Day holiday.[S1]
Crude futures continued their upward climb as Middle East tensions escalated. West Texas Intermediate, the US benchmark, advanced 2.8% to $94 per barrel, notching a sixth consecutive gain, while Brent, the global gauge, hovered near $99. The elevated energy costs intensified investor concerns that price pressures might linger, with attention turning to upcoming US inflation reports due later in the week.[S1]
The August producer price index is scheduled for release on Thursday, with the consumer price index following on Friday. These data points are likely to shape expectations for the Federal Reserve's meeting on September 15-16. Currently, money markets indicate a 60% probability of a 25-basis-point rate hike at that gathering. Treasury yields moved upward, with the 10-year note reaching 4.796%.[S1]
Semiconductors Shine, Trade Tensions Weigh
Chipmakers provided some of the few gains during the session. Intel surged over 9%, Advanced Micro Devices jumped 5.9%, and Broadcom added roughly 3%. However, investor sentiment was also dampened by fresh trade frictions between the US and Canada, as Ottawa's retaliatory tariffs on about $20 billion of American goods took effect on Tuesday.[S1]
European Markets Mixed
European bourses ended Tuesday with a mixed performance, as higher oil prices and geopolitical tensions in the Middle East kept traders cautious. The pan-European STOXX Europe 600 slipped 0.05% to 649.60 points. Britain's FTSE 100 declined 0.1% to 10,811.66, while Germany's DAX was virtually flat at 26,007.63. France's CAC 40 edged up 0.14% to close at 8,317.98.[S1]
Switzerland's SMI index dropped 1.55%, dragged down by pharmaceutical giant Novartis, whose shares tumbled nearly 11% after another failure in its drug development pipeline. Energy stocks advanced thanks to higher crude prices. Investors also kept an eye on the European Central Bank's monetary policy decision, which is due later in the week.[S1]
