Investing.com Overview

The S&P 500 fell Tuesday as investors fled risk assets due to escalating fears about a wider Middle East conflict after Iran launched missiles at Israel.

At 4:00 p.m. ET (2000 GMT):
– The Dow Jones Industrial Average was down 173 points, or 0.4%.
– The S&P 500 traded 1% lower.
– The NASDAQ Composite dropped 1.5%.

All three main averages on Wall Street advanced in both September and the third quarter, marking the first positive September for the S&P 500 since 2019. The S&P 500 is now up more than 20% this year, the first time since 1997 that the benchmark index has risen 20% or more through the first nine months of the year.

Iran Launches Strike on Israel

Iran launched ballistic missiles towards Israel, escalating a conflict in the oil-rich Middle East that risks involving major regional powers and the U.S. Iran warned international parties about the scale and timing of the attack. Israel indicated that powerful airstrikes would follow, signaling a potential retaliatory strike against Tehran.

This tension escalated as Israeli troops began “limited” raids against Hezbollah targets near the Lebanon border. The fears of a broader conflict raised oil prices due to concerns over supply disruptions, while defense stocks surged, including Lockheed Martin Corporation, Northrop Grumman Corporation, and L3Harris Technologies Inc.

Powell Reins in Major Cut Expectations

The new month began with Wall Street on the back foot as Fed chief Jerome Powell tempered expectations for another significant rate cut this month. He stated the committee is not in a hurry to cut rates quickly and that the rate-lowering process will take time.

Goldman Sachs strategists align Powell’s remarks with their forecast of 25 basis point cuts in November and December, noting that the choice between a 25bp and 50bp cut in November is a close call. The Fed initiated its policy shift last month with a 50bp rate cut, the first since 2020.

Heavy Economic Data Slate

Investors are looking for more clues about the Fed’s potential rate cuts through upcoming U.S. economic data. The Job Openings and Labor Turnover Survey (JOLTS) report is expected to show 7.640 million available roles in August.

Additionally, the September readings of the Institute for Supply Management’s manufacturing and services purchasing managers’ indices will be scrutinized for signals regarding the momentum of the American economy. The week will conclude with the October nonfarm payrolls report on Friday, with expectations of 144,000 jobs added to the U.S. economy.

Corporate News: CVS Health and Boeing

On the corporate front, CVS Health’s stock fell 2% after reports suggested the company is considering options, including breaking up its retail and insurance divisions.

Boeing Co cut losses to rise 1%, despite reports indicating the company is contemplating the sale of at least $10 billion worth of stock to enhance its balance sheet.

(Peter Nurse contributed to this story)