U.S. Stocks Decline Amid Middle East Tensions

U.S. stocks dropped on Tuesday as investors moved away from risk assets following Iran’s missile strikes on Israel.

At 12:55 p.m. ET (1655 GMT), the Dow Jones Industrial Average decreased by 214 points (0.5%), the S&P 500 fell by 1.1%, and the NASDAQ Composite lost 1.8%.

Despite the decline, all three major indices had positive performances in September and the third quarter, marking the first positive September for the S&P 500 since 2019. The S&P 500 is currently up more than 20% this year, marking the first time since 1997 that the index has achieved such growth in the first nine months.

Iran Launches Strike on Israel

Iran has reportedly launched ballistic missiles towards Israel, escalating tensions in the Middle East and potentially involving major regional powers as well as the U.S. Iran had previously warned of the attack’s scale and timing. This follows Israeli military actions against Hezbollah in Lebanon.

The conflict has benefitted defense stocks; companies such as Lockheed Martin, Northrop Grumman, and L3Harris have seen increases in their stock prices.

Powell Reigns in Rate Cut Expectations

The month started with Wall Street reacting to Federal Reserve Chairman Jerome Powell’s comments on interest rates. Powell suggested that the Fed is not in a hurry to implement significant rate cuts, indicating that this process will unfold over time. Goldman Sachs strategists anticipate a 25 basis point cut in November and December.

The Fed initiated its policy shift last month with a 50 basis point rate cut, the first reduction since 2020.

Heavy Economic Data Slate

Investors are awaiting more economic data to gauge the Fed’s approach to potential rate cuts. The Job Openings and Labor Turnover Survey (JOLTS) is expected to show approximately 7.640 million available jobs in August. Additionally, the September readings of the Institute for Supply Management’s indices for manufacturing and services are closely watched for insights into the U.S. economy’s momentum. This week concludes with the release of the October nonfarm payrolls report, with economists forecasting the addition of 144,000 jobs.

CVS Health Mulls Options; Boeing Reportedly Eyes Stock Sale

In corporate news, CVS Health’s stock fell by 9% after reports emerged that the company is considering restructuring, potentially separating its retail and insurance divisions. Meanwhile, Boeing Co’s stock declined by over 1% amid reports it is contemplating a stock sale worth at least $10 billion to improve its balance sheet.
(Peter Nurse contributed to this story)