US stocks today: US stocks end lower as oil, yields raise September jitters

Wall Street began September on a sour note on Tuesday, with all three major U.S. stock indexes ending lower as rising oil prices and higher bond yields put investors on edge.

The S&P 500 fell 0.71% to 7,631.95, while the Nasdaq Composite dropped 1.01% to 26,099.77. The Dow Jones Industrial Average declined 0.78% to 52,772.49, according to preliminary data cited by Reuters.

The pressure came from two fronts. Renewed U.S. attacks on Iranian targets around the Strait of Hormuz pushed crude prices higher, reviving inflation concerns, while a deepening global bond selloff drove sovereign yields to multiyear highs.


The benchmark U.S. Treasury yield also continued to edge higher after reaching a 19-month high on Monday, Reuters reported.

"Following Kevin Warsh's hawkish comments on Friday, we have strikes in Iran and oil is higher," said Ross Mayfield, investment strategy analyst at Baird in Louisville, Kentucky. "It is the perfect cocktail for a risk-off day in a market that is trading near all-time highs."

The market's weak start also comes at a historically difficult time for equities. September is the only month with a negative average return since 1926, according to Fisher Investments, which cited data from Finaeon.

"September is the worst month historically and by a large margin. Particularly in midterm election years, this tends to be the point in the calendar where political anxiety and uncertainty start to weigh on equity markets," Mayfield said.


Oil shock adds to rate hike bets


The latest escalation in the Middle East has added another complication for a Federal Reserve already focused on inflation. The rise in crude prices has intensified concerns about price pressures just days after Warsh said he would bring inflation back to the central bank's target.

Markets are now pricing in a 68.2% likelihood of a 25-basis-point Fed rate hike at the end of its September meeting, up from 39.6% a week earlier, according to CME's FedWatch tool, Reuters reported.

"We have a very, very hawkish Fed, and they absolutely want to raise rates," said Jay Hatfield, portfolio manager at InfraCap in New York. "They want to demonstrate their independence from the administration."

The geopolitical risks escalated after the U.S. launched a new barrage of airstrikes against Iranian targets around the Strait of Hormuz. The strikes followed Treasury Secretary Scott Bessent's remarks that Washington would probably announce new bank sanctions against Iran to "economically asphyxiate" Tehran's leadership.

Iran, meanwhile, warned it would prevent oil exports from the Gulf, adding to uncertainty around energy supplies.

Economic data offered little relief. The Labor Department's JOLTS report showed the U.S. jobs market churn slowing, while Purchasing Managers' Index data pointed to weaker factory activity and residential construction spending fell.

Together, the reports pointed to an economy facing high prices, supply constraints and uncertainty stemming from tariffs and geopolitical tensions.

Energy stocks bucked the broader market decline, benefiting from higher crude prices. The Dow Jones Transportation Average, viewed as a barometer of economic health, was among the session's biggest laggards.

The Philadelphia SE Semiconductor Index also slipped, with every constituent of the index losing ground, Reuters reported.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times)