Oil prices pressure Wall Street
US stocks fell on Tuesday in their return to trading from a three-day weekend after the latest fighting in the war with Iran pushed oil prices higher.
The S&P 500 sank 0.6%. The Dow Jones Industrial Average dropped 628 points, or 1.2%, and the Nasdaq composite dipped 0.3%.
They felt pressure from rising oil prices after a barrel of Brent crude briefly climbed as high as $US99.46. It later settled at $US97.92, up 0.9%, to continue its run from roughly $US72 in early July as increased fighting in the Middle East keeps the global flow of oil constricted.
Inflation reports loom
More expensive oil has worsened worries about the high inflation weighing on people and companies across the country, which gives extra weight to a couple of reports coming later this week.
On Thursday, the US government will release its August report for inflation at the wholesale level, which economists expect will show an acceleration to 5.4% from 4.7% in July.
The more closely watched report on inflation that US consumers are feeling will arrive on Friday. That update will show how much more people are paying for groceries, clothes and other costs of living than a year earlier, and economists expect it eased a bit to 3.3% from July's 3.4% inflation rate. That, though, remains well above the 2% target that the Federal Reserve has set as its goal.
This week's updates on inflation will be the last before the Fed meets next week to decide whether to cut, raise or hold interest rates steady. The traditional move for the Fed when inflation is high is to raise its main interest rate. That in turn would filter out into the rest of the bond market, make it more expensive for companies and people to borrow, slow the overall economy, undercut prices for investments and hopefully rein in inflation.
But President Donald Trump has been lobbying for lower interest rates instead, which could give the economy and inflation an extra kick. The Fed's new chairman, Kevin Warsh, has meanwhile said he wants to give financial markets fewer clues about what the Fed plans to do with interest rates in the short term.
That all has traders betting on a nearly 60% probability the Fed will raise its federal funds rate at the conclusion of its next meeting on September 16, according to data from CME Group.
Treasury yields rise
In the bond market, the yield on the 10-year Treasury rose to 4.79% from 4.78% and is near its highest level since the autumn of 2023.
Higher Treasury yields put more pressure on companies to grow their profits in order to lift their stock prices.
Asia markets mixed
In stock markets abroad, Japan's Nikkei 225 sank 1.7% under the weight of losses for major exporters, which were hurt by the continued rise for the Japanese yen against the US dollar.
A stronger yen erodes the value of sales made in US dollars when Toyota Motor, Panasonic Holdings and other exporters translate them back into the Japanese currency. The Bank of Japan is also scheduled to meet next week on interest rates, and speculation is climbing that it could raise interest rates, which could further strengthen the yen.
In China, indexes fell 0.4% in Hong Kong and rose 0.2% in Shanghai after the world's second-largest economy said its exports jumped 25% year-on-year in August, driven by strong demand for cars and high-tech items.
