NEW YORK — Wall Street's three main indexes fell as renewed military exchanges between the United States and Iran drove both oil prices and Treasury yields higher.
The Dow Jones Industrial Average closed at 52,766.88 on the 1st, down 419.02 points, or 0.79%, from the previous session. The Standard & Poor's 500 fell 54.67 points, or 0.71%, to 7,631.47, while the Nasdaq Composite dropped 271.1 points, or 1.03%, to 26,099.77.
Among the largest companies by market capitalization, Nvidia fell 1.51%, Microsoft slid 1.24%, Amazon dropped 1.87%, Google parent Alphabet lost 1.28%, TSMC edged down 0.32%, SpaceX fell 1.02%, Broadcom slipped 0.18%, Tesla tumbled 3.22%, SK hynix lost 2.31% and Micron fell 2.64%. Only a few names advanced, including Apple, up 2.61%, and Facebook parent Meta, up 1.08%. The Philadelphia Semiconductor Index also fell 2.14%.
Equities took a direct hit from a jump in U.S. Treasury yields driven by inflation concerns. In the bond market, the yield on the 10-year Treasury note, the global benchmark, rose as high as 4.7980% during the session, the highest level since January last year. The two-year yield, which is sensitive to monetary policy, climbed to 4.3890%, and the 30-year yield, a reference for U.S. mortgage rates, rose to 5.286%, approaching its highest level since 2007, just before the global financial crisis.
The inflation worries stemmed from renewed military exchanges between the United States and Iran over the Strait of Hormuz. U.S. Central Command said it had resumed airstrikes on targets tied to Iran's Islamic Revolutionary Guard Corps after a two-day pause. Hossein Mohebbi, a spokesperson for the IRGC, warned on X, formerly Twitter, that harsh punishment awaited the aggressors and that the United States would come to regret its new attacks. Iran's Khatam al-Anbiya Central Headquarters, which oversees the country's armed forces, said in a statement that it would impose a heavy price on the enemy and deliver devastating and lethal blows to the cowardly and wicked American enemy that struck Sistan and Baluchestan province and Hormozgan province.
Brent crude futures for November delivery settled 4.60% higher at $94.65 a barrel on the ICE Futures exchange in London, while West Texas Intermediate futures for October delivery rose 5.20% to $90.22 a barrel on the New York Mercantile Exchange. Brent hit its highest level since July 24 and WTI since July 23.
Bond markets also continued to react to remarks by Federal Reserve Chair Kevin Warsh, who signaled in a keynote speech at the central bank's economic policy symposium in Jackson Hole, Wyoming, on the 28th of last month that a rate increase could be considered. According to CME Group's FedWatch tool, the federal funds futures market cut the odds of the Fed holding rates steady at its Federal Open Market Committee meeting on the 15th and 16th of next month to 31.8%, from 64.6% on the 27th, just before the Jackson Hole gathering. The odds of a hike rose to 68.2% from 35.4%. The probability that the Fed holds rates steady for the rest of the year fell to 8.9% from 25.9%, while the chance of an increase rose to 91.1% from 74.1%.
U.S. job openings totaled 7.272 million in July, according to the Labor Department's Job Openings and Labor Turnover Survey released on the 1st. That was up 89,000 from June and in line with the consensus estimate compiled by Dow Jones, a sign that the labor market remains relatively stable compared with prices. The Institute for Supply Management's manufacturing purchasing managers' index came in at 54.6 for August, down from 55.6 in July. Manufacturing expanded for an eighth straight month, though the pace of growth slowed.
