Dow drops 600 points to start shortened week as oil prices climb: Live updates

Primary Journalistic Dispatch & Direct Reporting

Stocks dropped Tuesday to kick off a shortened week of trading, with investors monitoring escalating tensions in the Middle East ahead of a key inflation reading later this week.

The Dow Jones Industrial Average tumbled 524 points, or 1%, while the S&P 500 was down by 0.3%. The Nasdaq Composite was last lower by 0.1%. U.S. markets were closed Monday for the Labor Day holiday.

Stocks came under pressure as oil prices continued to rise. West Texas Intermediate futures climbed for a sixth straight day - its longest rally since a seven-day streak back in March - after the U.S. and Iran exchanged blows over the weekend. Brent crude oil futures last hovered around $98 per barrel.

In-Depth Developments & Factual Context

The spike in energy prices sharpens investors' focus on inflation data set to release later this week, as they will likely shape expectations for monetary policy ahead of the Federal Reserve's meeting next week. The producer price index and consumer price index for August are due out Thursday and Friday, respectively.

Fed funds futures were last pricing in a 58% chance the central bank will hike rates by a quarter-percentage point after the Sept. 15-16 meeting, according to the CME Group's FedWatch tool .

"If you have a CPI reading that surprises to the upside, that's going to really make it difficult for them not to hike rates," said Mark Hackett, chief market strategist at Nationwide. "And that is effectively what investors are focused on right now."

Industry Impact & Strategic Analysis

Semiconductors were a bright spot during the session, helping to offset losses from higher oil prices. The VanEck Semiconductor ETF (SMH) gained 1.6%. Shares of Intel and Advanced Micro Devices surged 10% and 6%, respectively. Broadcom climbed more than 2%.

The spike in energy prices also put upward pressure on Treasury yields. The benchmark 10-year Treasury note yield last week climbed to its highest level since November 2023, while the shorter-term 2-year note yield scaled to a January 2025 high.

Traders also have to contend with renewed trade tensions between the U.S. and Canada. Retaliatory tariffs from Canada on about $20 billion of U.S. goods take effect on Tuesday. President Donald Trump on Monday said ahead of the new duties that Canadian aircraft manufacturer Bombardier can't sell in the U.S. unless Canada begins making its products in the U.S.

Forward Outlook & Market Perspective

Here are some of the companies making headlines in midday trading.

Stryker - The medical equipment maker dropped more than 7% after management said Stryker's peripheral vascular business is suffering from supply constraints that are expected to act as a headwind through the third quarter and into the fourth quarter of the year.

Amgen - The biotech stock slid almost 10%. Rival Novartis' cholesterol drug pelacarsen fell short in a closely watched study. In turn, this lowered traders' expectations for Amgen's olpasiran ahead of late-stage data due in 2027 or early 2028. BMO Capital Markets also cut its rating on Amgen to market perform, but kept its price target at $450, suggesting upside of just 3%.

Qualcomm - The chipmaker jumped 4%. Qualcomm entered a data center infrastructure partnership with Amazon Web Services. As part of the deal, Qualcomm said it issued Amazon warrants to buy 25 million shares for $4 billion.

A broadening of the stock market could mean the leadership in momentum shifts toward more mid-cycle companies that prioritize free cash flow and operational efficiency, according to Mike Wilson, chief U.S. equity strategist at Morgan Stanley.

"Momentum is ripe for a comeback - but with different constituents leading. We view the recent momentum unwind as a symptom of the transition from early to mid cycle and from AI enablers to adopters, not simply a positioning event," Wilson wrote on Tuesday. "As momentum rebuilds, we expect the long leg to increasingly feature services-oriented, asset-light companies with strong free cash flow."

Reporting synthesized and verified under Nexvoro.tech editorial guidelines. Full primary records referenced via Google News US Business & Markets.