US stocks fell on Tuesday as oil prices continued to rise amid the Iran war, increasing inflation concerns ahead of key US price data later this week.
The Dow Jones Industrial Average dropped 628.18 points, or 1.18%, to 52,786.07. The S&P 500 fell 0.58% to 7,673.52, while the Nasdaq Composite declined 0.32% to 26,421.41, with all three indices recording a second consecutive session of losses.
Healthcare led the decline, with eight of the S&P 500’s 11 sectors finishing lower. Semiconductors bucked the trend, with the VanEck Semiconductor ETF gaining 1.2%. Intel jumped 9.1%, AMD rose 5.9% and Broadcom added 3%.
Oil prices extended their rally after the US and Iran exchanged strikes over the weekend. Brent crude settled nearly 1% higher at US$97.92 a barrel before briefly reaching US$99 after the close.
Higher energy prices also put renewed upward pressure on Treasury yields and sharpened the focus on inflation. Markets are pricing in a 59% probability of a 25-basis-point Federal Reserve rate rise at next week’s meeting.
Investors now turn to US producer and consumer inflation figures due Thursday and Friday. A stronger-than-expected reading could reinforce expectations that the Fed will raise rates at its September 15-16 meeting.
Australian Market Outlook
Australian shares are set to open modestly higher despite Wall Street’s decline, with S&P/ASX 200 futures up 17 points, or 0.2%, to 8,924.
Futures pared earlier gains as selling gathered momentum in New York, while oil approached US$99 a barrel and US bond yields moved higher.
The elevated oil price could provide support for local energy stocks, although renewed inflation concerns and higher global bond yields may weigh on the broader market.
Morgan Stanley’s US equity strategists remain positive on the outlook for equities, viewing the recent rotation as part of a transition from early to mid-cycle conditions and from AI infrastructure providers towards companies adopting the technology.
