Stocks slipped Tuesday as what appeared to be an escalating situation in the Middle East poured water on investor enthusiasm coming off a strong quarter.
The Dow Jones Industrial Average fell 168 points, or 0.4%. The S&P 500 pulled back 1.1%, and the Nasdaq Composite lost 1.6%.
West Texas Intermediate crude oil spiked after the Israel Defense Forces said Iran was firing missiles at the country. A jump in the CBOE Volatility Index (VIX), also known as Wall Street’s fear gauge, above 20 underscored the rising concern among traders.
“The fear of contagion is always destabilizing,” said Keith Buchanan, senior portfolio manager at Globalt Investments. “Aside from, of course, the paramount impact on lives, the markets take a direct hit when there are forces that are almost promising some level of destabilization.”
About 4 out of every 5 S&P 500 stocks traded lower in the session, highlighting the broad troubles for the market. But energy names notably diverged following the Middle East report, with the S&P 500 sector climbing more than 1%.
Tech names felt the brunt of Tuesday’s declines, explaining the Nasdaq’s outsized losses. Tesla slid 4%, while Nvidia and Apple dropped more than 3%. But Facebook parent Meta bucked this trend, rising near all-time highs.
Small-cap stocks also took a hit, with the Russell 2000 sliding more than 1%.
Stocks come off winning month and quarter
Tuesday’s pullback comes after the S&P 500 and the Dow notched closing records in the previous session, which marked the end of the trading month and quarter. September is typically the worst month of the year for stocks, but this time it broke with past trends.
All three major averages posted monthly gains, and it was the first positive September for the S&P 500 since 2019. The S&P 500, Dow and Nasdaq also ended the third quarter in positive territory.
Stocks advanced Monday even after Federal Reserve Chair Jerome Powell said the central bank is “not on any preset course” when it comes to the next steps for rate policy. He said to expect two more cuts this year — that is, a quarter percentage point each — if the economy performs as anticipated.
Investors will now look to September’s nonfarm payrolls report on Friday, which could serve as a catalyst for the major averages.
Traders were also monitoring a strike by members of the International Longshoremen’s Association on the East and Gulf coasts. While consumers may not feel the pinch immediately, the stoppage could cost the U.S. economy hundreds of millions of dollars.
Halliburton, Lockheed Martin among the names making moves midday
36 S&P 500 stocks notch fresh highs
Thirty-six S&P 500 stocks were reaching fresh highs during midday trading on Tuesday, including mega-cap tech stock Meta Platforms.
Here are some of those names:
On the other hand, one stock dipped to a fresh low: Dow component Boeing fell to levels not seen since Nov. 2022.
— Sarah Min, Chris Hayes
Defense stocks catch a bid and cruise lines are knocked as Mideast tensions mount
Defense manufacturers that stand to benefit from increased demand for military hardware outperformed the market Tuesday after a U.S. official told NBC News that Iran is readying an “imminent” ballistic missile attack against Israel.
Northrop Grumman, maker of the B-21 stealth bomber, and Lockheed Martin, the prime contractor for the F-35 fighter, each climbed about 4% in late morning trading, while RTX Corp., the maker of the Patriot missile system, rose about 2.25%. General Dynamics added about 0.4%, and Huntington Ingalls inched up 0.1% in a down market.
The $6.2 billion, 35-stock iShares US Aerospace & Defense ETF (ITA) was about 0.8% higher. The ITA has performed about in line with the broader market this year, gaining 19% against the S&P 500 rally of 19.5%.
At the same time, tourist cruise line stocks slumped Tuesday as concern grew that bookings and sailings might be hurt by an increase in geopolitical conflict. Carnival Corp. slid 4.4%, Norwegian Cruise Line lost 3%, and Royal Caribbean Cruises gave back 2.6%.
— Scott Schnipper
U.S. crude oil spikes nearly 4% on fears Iran will attack Israel
U.S. crude oil jumped nearly 4% on Tuesday as the White House warned that Iran is preparing for an imminent attack against Israel.
U.S. crude rose $2.61 to trade at 3.83% late morning, while global benchmark Brent jumped 3.6%, or $2.58, to $74.28 per barrel.
Tensions in the Middle East have escalated dramatically over the past week, as Israel has pounded the Iran-backed militia Hezbollah with airstrikes and dispatched ground troops in southern Lebanon.
The impact on the oil market will depend on the “scope and damage” caused by an Iranian attack, which in turn will drive Israel’s response, said Bob McNally, president of Rapidan Energy.
Iran launched hundreds of ballistic missiles and drones against Israel in April, but the U.S. and its allies foiled that attack. This gave space for Israel to retaliate with small strike in Iran that did not further escalate the situation.
McNally said “the crude risk premium should quickly dissipate” if there is a repeat of “April’s failed Iranian and restrained Israel exchanges.”
He cautioned, however, that Israel has increasingly adopted a “three eyes for an eye” approach to attacks from regional enemies.
— Spencer Kimball
Technology sector struggles
The Nasdaq Composite dropped 1.7%, led to the downside by Apple, Nvidia and Microsoft. Broadcom, Tesla and Amazon also contributed to the losses, slumping at least 2% each.
— Samantha Subin
Israeli stock market on pace for worst day since Sept. 8
The Israeli stock market sold off Tuesday as Middle East tensions intensified. The Tel Aviv 35 Index (.TA35) fell 1.4% on the day, on pace for the first negative day in eight and the worst day since Sept. 8.
White House and Defense Department officials told NBC News that the U.S. “has indications that Iran is preparing to imminently launch a ballistic missile attack against Israel.”
“We are actively supporting defensive preparations to defend Israel against this attack. A direct military attack from Iran against Israel will carry severe consequences for Iran,” a senior White House official told NBC.
The MSCI Israel ETF (EIS), a U.S.-listed fund, slid more than 2%.
— Yun Li, Gina Francolla
Gold rises on Middle East tensions
Gold prices rose 1% on Tuesday following reports of possible escalation in the Middle East between Iran, Lebanon and Israel.
The commodity is considered a safe-haven asset during periods of political and economic unrest.
SPDR Gold Shares, a fund that tracks the metal, also jumped 1% on the news.
— Sean Conlon
Energy outperforms Tuesday
Job openings rise, manufacturing slips further
Job openings totaled more than expected in August while the U.S. manufacturing sector slipped further into decline during September, according to economic data released Tuesday.
- The Labor Department’s Job Openings and Labor Turnover Survey showed that new positions rose to just over 8 million, an increase of 329,000 from July and better than the Dow Jones estimate of 7.7 million. The rate as a share of the labor force rose to 4.8%, up 0.2 percentage point.
- However, hiring declined by 99,000 to 5.32 million, though total separations tumbled below 5 million for the first time since August 2020, putting the separations rate at 3.1%, tied for the lowest since December 2012.
- The ISM manufacturing reading for September came in unchanged at 47.2%, representing the share of companies reporting expansion. That was slightly below the 47.5% forecast. The employment, inventories and prices indexes all showed declines, while the production measure rose.
— Jeff Cox
VIX jumps as tensions in Middle East intensify
The Cboe Volatility Index (VIX) spiked above 19 on Tuesday, hitting its highest level since Sept. 11, as traders sought safety amid growing tensions in the Middle East.
NBC News reported, citing White House and Defense Department officials, that the U.S. “has indications that Iran is preparing to imminently launch a ballistic missile attack against Israel.”
“We are actively supporting defensive preparations to defend Israel against this attack. A direct military attack from Iran against Israel will carry severe consequences for Iran,” the White House official said.
— Fred Imbert
S&P 500 opens little changed
The S&P 500 opened Tuesday’s session little changed, a muted start to the new trading month and quarter.
The broad index and Nasdaq Composite each shed 0.2% shortly after 9:30 a.m. ET. The Dow slipped 0.3%.
— Alex Harring
Charles Schwab announces CEO change
Charles Schwab is changing CEOs, as the brokerage firm announced that Walt Bettinger will retire from the job at the end of the year. Charles Schwab President Rick Wurster will take over.
Bettinger, who turns 65 next year, has been in the top job at Schwab since 2008. He will remain as co-chair of the company’s board.
“Rick Wurster and I have worked together on a daily basis for more than eight years. I have complete confidence in his leadership, and I am thrilled that the Schwab Board of Directors has selected him as my successor,” Bettinger said in a statement.
Shares of Schwab were little changed in premarket trading.
— Jesse Pound
AI chip startup files for IPO
Artificial intelligence chipmaker and Nvidia competitor Cerebras Systems filed its prospectus for an initial public offering Monday.
The company will trade on the Nasdaq under the ticker symbol “CBRS.”
According to filings, Cerebras posted a net loss of $66.6 million and $136.4 million in sales during the first six months of the year.
— Samantha Subin, Kif Leswing, Jordan Novet
Stocks making the biggest moves premarket
Check out the companies making headlines before the bell:
- Ford Motor — The automaker jumped 2.3% after Goldman Sachs upgraded shares to buy from neutral. The firm highlighted its growing software and services and Super Duty vehicles as potential tailwinds.
- Disney — Shares of the media company slipped around 0.9% following a downgrade by Raymond James to market perform from outperform. Analyst Ric Prentiss believes Disney’s parks segment is coming under pressure.
- CVS Health – Shares rose 2% after CNBC, citing people familiar with the matter, reported that CVS is working with advisors on a strategic review of its business. Reuters first reported the news that the company is exploring options, which may include a potential breakup.
The full list can be found here.
— Hakyung Kim
CVS shares rise after strategic business review comes to light
CVS shares rose in Tuesday’s premarket after CNBC reported that the pharmacy chain is working with advisors on a strategic business review.
The review has been ongoing, but it’s unclear what actions, if any, will come as a result, people familiar with the matter told CNBC. This unearthed detail comes as the Rhode Island-based chain grapples with potential activist pressure.
Shares have tumbled more than 20% in 2024, placing the stock on track for its third straight losing year.
— Alex Harring, Rohan Goswami
East and Gulf coast ports shut down as workers go on strike
Stellantis shares fall for a second day
Stellantis shares fell more than 1% in the premarket after the automaker said it would extend a production halt on electric Fiat 500s until next month, citing poor demand.
That decline comes a day after the stock dropped 12.5% — its biggest one-day drop since March 16, 2020, when it shed 21.6%.
— Fred Imbert
Bank of America says solid jobs data could give stocks a boost
Another pivotal U.S. jobs report this week will determine the market’s direction, and Bank of America strategists think it’s likely to push stocks to more record highs.
“Risk is to the upside, absent [a] big miss,” the Wall Street firm said in a note to clients Sunday. “We think the data will reinforce our outlook for a soft landing. Economic momentum is cooling, not crumbling.”
Bank of America noted that because nonfarm payroll data had been weak in July and August, the bar is low for a relief rally.
— Yun Li
S&P 500’s 20% gain through three quarters could bode well for Q4
Another good quarter is in the books. The S&P 500 rose for the fourth straight quarter for the first time since the seven straight quarters of gains ended in Q4 2021.
So far this year, the S&P 500 is now up more than 20%, with three quarters done. That’s the first time since 1997 that the index has risen 20% or more through the first nine months of the year.
It’s a rare feat, too. This is just the 10th time it has happened since 1950.
Bulls will also take note that in almost all cases, the S&P 500 has finished the year much higher after this strong of a start. In fact, only once — during the 1987 crash year — has the S&P 500 fared significantly worse by the end of the year after such a strong showing in the first nine months.
— Robert Hum
Stocks futures open little changed
Stocks futures opened little changed on Monday, as equities concluded September trading with gains.
Futures tied to the S&P 500 ticked down 0.1%, alongside Nasdaq 100 futures. Dow Jones Industrial Average futures ticked down 64 points, or 0.1%.
— Brian Evans
