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Financial Markets 09/08 15:25
NEW YORK (AP) -- U.S. stocks fell 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 $99.46. It later settled at $97.92, up 0.9%, to
continue its run from roughly $72 in early July as increased fighting in the
Middle East keeps the global flow of oil constricted.
More expensive oil has worsened worries about the high inflation weighing on
people and companies across the country, which gives extra heft to a couple
reports coming later this week. On Thursday, the U.S. 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 U.S. 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 Sept. 16,
according to data from CME Group.
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.
On Wall Street, Boston Scientific fell 5.9% after saying that a network
outage earlier this summer caused by a cybersecurity incident means it's
unlikely to meet forecasts for sales and profit for the third quarter and for
the fully year of 2026. It expects to make back some of the revenue as it
continues to ramp operations globally, fulfill customer orders and reduce
remaining backlogs, but it doesn't yet know the full impacts.
Shares of Novartis that trade in the United States tumbled 13.9% after the
Swiss pharmaceutical company gave a discouraging update on a study of a therapy
for people living with myotonic dystrophy type 1, a neuromuscular disease.
Qualcomm helped limit the market's losses after rising 3.2%. It announced a
deal to collaborate with Amazon on large-scale AI data centers. The deal also
gives Amazon the right to acquire up to 25 million of Qualcomm's shares at
$161.26 per share.
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 U.S. dollar.
A stronger yen erodes the value of sales made in U.S. 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 autos and high tech items.
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AP Business Writers Matt Ott, Elaine Kurtenbach, Chan Ho-him and Yuri
Kageyama contributed to this report.
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