After a three-day weekend, US stocks fell on Tuesday. The main drivers were rising crude prices and escalating tension in the Middle East. This has taken a toll on the stakeholder sentiment. The Dow Jones Industrial Average fell 628.18 points to 52,786.07. The S&P 500 fell 0.58% to 7,673.52. The Nasdaq Composite fell 0.32% to 26,421.41. Stakeholders are monitoring oil prices and US inflation data, with the Producer Price Index (PPI) due Thursday. They have also been waiting for the Consumer Price Index (CPI) scheduled for Friday. The information could affect expectations around the Federal Reserve’s next policy decision.
Why Did Dow Jones Fall 630 Points?
As the investors returned from the Labor Day holiday, the Dow Jones fell. This is mainly because of increased crude oil prices and growing tensions in the Middle East. The US Stock Market was closed on Monday for Labor Day, making Tuesday the first trading session after a long break.
Oil prices were on a rise, with WTI rising for a sixth straight day. Brent settled 0.9% higher at $97.92 a barrel after touching $99.46 intraday, and climbed toward $99 after the close. The rise in crude prices added to inflation concerns and its subsequent effect on the monetary policy. Another key concern is the unstable geopolitical situation. Renewed US-Iran strikes added uncertainty. Saudi Arabia also halted operations at energy facilities across its southern region after Houthi attacks, according to the kingdom’s press agency.
The wider market also faced pressure from increasing Treasury yields. The 10-year Treasury yield climbed last week to its highest level since November 2023, and the two-year reached a January 2025 high. Higher yields added pressure as investors weighed the effect of rates on equities and growth.
Despite the comprehensive plunge, semiconductor stocks provided some relief. The VanEck Semiconductor ETF gained 1.2% while Intel rose 9.1%, AMD gained 5.9% and Broadcom increased 3%. Canada’s retaliatory tariffs on about $20 billion of US goods took effect just after midnight Tuesday, after negotiations collapsed last month. President Donald Trump said Bombardier would not be able to sell in the United States unless it manufactured its products in the country.
The Dow Jones Industrial Average fell on Friday as August’s hotter-than-expected payrolls reading increased expectations that the Federal Reserve could raise interest rates at its next meeting.
Here’s a look at the summer returns of the major U.S. indexes since 2023.
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— CNBC (@CNBC) September 8, 2026
What is Next for US Stocks and the Fed?
Stakeholders are patiently waiting for the new inflation figures, with the PPI report and CPI data due Thursday and Friday respectively. The figures will be cautiously monitored ahead of the Federal Reserve’s September meeting. As per CME FedWatch, Fed funds futures were pricing in a 59% chance of a 25-basis point rate hike. Nationwide’s Mark Hackett said that a surprise in CPI would make it arduous for the Federal Reserve not to raise rates. The market reaction would rely on the inflation data and how it affects expectations for the Fed. Soaring oil prices could add to inflation, while the upcoming CPI and PPI data may provide further context about the central bank’s next step.
The issue does not limit itself to U.S. markets. Asian markets also closed lower, with the Kospi falling 0.58%, Kosdaq plunging 1.25%, Nikkei dropping 1.7%, Topix declining 1.83%, CSI300 falling 0.36%, Hang Seng declining 0.3%, and ASX200 plunging 1%. European shares also opened lower, with the Stoxx 600 down 0.3%. Similarly, energy stocks continued to propel from higher crude prices. The global energy ETF reached an all-time high while energy stocks across global markets also moved up. Economists expect Thursday’s PPI to show acceleration to 5.4% from 4.7% in July.
