NEW YORK (AP) — U.S. stocks are retreating from their records Tuesday as worries worsen about potentially escalating violence in the Middle East.
The S&P 500 pulled 1.1% lower, a day after setting an all-time high for the 43rd time this year. The Dow Jones Industrial Average was down 225 points, or 0.5%, in midday trading after coming off its own record. The Nasdaq composite was 1.7% lower, as of 11 a.m. Eastern time.
Oil prices jumped as worries ratcheted higher that worsening tensions in the Middle East could disrupt the flow of crude from the region. Iran is preparing to “imminently” launch a ballistic missile attack on Israel, according to a senior U.S. administration official, who warned Tuesday morning of “severe consequences” should it take place. A barrel of benchmark U.S. crude rose 3.7% to top $70.
The sharp swings halted, at least temporarily, what had been a run to records for U.S. stocks. They had been jumping on hopes the U.S. economy can continue to grow despite a slowdown in the job market, as the Federal Reserve cuts interest rates to give it more juice. The Fed last month lowered its main interest rate for the first time in more than four years, and it’s indicated it will deliver more cuts through next year.
The question is whether the cuts will ultimately prove to be too little, too late after the Fed earlier kept rates at a two-decade high in hopes of braking on the economy enough to stamp out high inflation.
A discouraging report arrived Tuesday, showing U.S. manufacturing weakened by more in September than economists expected. Manufacturing has been one of the areas of the economy hurt most by high interest rates, and the report from the Institute for Supply Management said demand continues to slow.
A separate report was potentially more encouraging. It showed U.S. employers were advertising more than 8 million job openings at the end of August. That was slightly more than July's number and better than what economists were expecting. A more comprehensive report on hiring will arrive on Friday, when the U.S. government details how many jobs U.S. employers created in September.
Besides the job market, another threat to the economy could lie in the strike by dockworkers at 36 ports across the eastern United States. It could threaten to snarl supply chains and drive up inflation if it lasts a while.
The workers are asking for a labor contract that doesn’t allow automation to take their jobs, among other things. So far, financial markets have been taking the strike in stride. Supply chain experts say consumers won’t see an immediate impact from the strike because most retailers stocked up on goods, moving ahead shipments of holiday gift items.
On Wall Street, the majority of stocks were falling. Among the exceptions were defense contractors that make weapons and oil-and-gas companies that could benefit from higher crude prices.
Northrop Grumman flew 2.7% higher, and Marathon Oil gained 2.8% for two of the bigger gains in the S&P 500.
Signet Jewelers dropped 8% after the diamond retailer said CEO Virginia Drosos is retiring, effective Nov. 4. The company named J.K. Symancyk, who was most recently the CEO of PetSmart, as her successor.
In the bond market, the yield on the 10-year Treasury fell to 3.71% from 3.79% late Monday. Yields fell after worries about the Middle East drove investors into Treasurys, gold and other investments seen as safer.
Yields had already been easing worldwide following an encouraging earlier update on inflation from Europe. Inflation among the 20 countries that use the euro currency came in below 2% in September for the first time in more than three years, and the slowdown could give the European Central Bank leeway to cut interest rates more quickly.
In stock markets abroad, European indexes swung from modest gains to losses. They fell 1% in France and 0.7% in Germany.
Farther east, a quarterly “tankan” survey by the Bank of Japan showed more large manufacturers are still feeling optimistic about business conditions than pessimistic. Japan also reported that its unemployment rate for August fell to 2.5% from 2.7% in July, in line with market expectations.
Japan’s benchmark Nikkei 225 rallied 1.9% to claw back some of its steep 4.8% loss from the day before.
Markets in China and South Korea were shut for holidays. Mainland Chinese markets, which had their best day since 2008 on Monday, will remain closed until Oct. 7 for the National Day break.
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AP Writers Matt Ott and Zimo Zhong contributed.
The Federal Reserve cut its key interest rate Wednesday for a second time this year as it seeks to shore up economic growth and hiring even as inflation stays elevated. The move comes amid a fraught time for the central bank, with hiring sluggish and yet inflation stuck above the Fed’s 2% target. Compounding its challenges, the central bank is navigating without much of the economic data it typically relies on from the government. The Fed has signaled it may reduce its key rate again in December but the data drought raises the uncertainty around its next moves. Fed Chair Jerome Powell told reporters that there were “strongly differing views” at the central bank's policy meeting about to proceed going forward.
The Federal Reserve will almost certainly cut its key interest rate on Wednesday and could signal it expects another cut in December as the central bank seeks to bolster hiring. A cut Wednesday would be the second this year and could benefit consumers by bringing down borrowing costs for mortgages and auto loans. Since Fed chair Jerome Powell strongly signaled in late August that rate cuts were likely this year, the average 30-year mortgage rate has fallen to about 6.2% from 6.6%. Still, the Fed is navigating an unusual period for the U.S. economy and its future moves are harder to anticipate than is typically the case.
Stocks are rallying toward more records ahead of a week packed with potentially market-moving events. The S&P 500 rose 1% Monday. The Dow Jones Industrial Average added 224 points, and the Nasdaq composite jumped 1.7%. Stocks also climbed in Asia ahead of a meeting on Thursday between the heads of the United States and China. The hope is that the talks could clear rising tensions between the world’s two largest economies. This upcoming week will feature profit reports from some of Wall Street's most influential companies and a meeting by the Federal Reserve on interest rates. Gold fell back toward $4,000 per ounce.
U.S. and Chinese officials say a trade deal between the world’s two largest economies is drawing closer. The sides have reached an initial consensus for President Donald Trump and Chinese leader Xi Jinping to aim to finalize during their high-stakes meeting Thursday in South Korea. Any agreement would be a relief to international markets. Trump's treasury secretary says discussions with China yielded preliminary agreements to stop the precursor chemicals for fentanyl from coming into the United States. Scott Bessent also says Beijing would make “substantial” purchases of soybean and other agricultural products while putting off export controls on rare earth elements needed for advanced technologies.
Some seniors say the Social Security Administration's cost-of-living adjustment won’t help much in their ability to pay for their daily expenses. The agency announced Friday the annual cost-of-living adjustment will go up by 2.8% in 2026, translating to an average increase of more than $56 for retirees every month. Eighty-year-old Florence, South Carolina, resident Linda Deas says it does not match the current "affordability crisis.” The benefits increase will go into effect for Social Security recipients beginning in January. Friday’s announcement was meant to be made last week but was delayed because of the federal government shutdown. Recipients got a 2.5% COLA boost in 2025 and a 3.2% increase in 2024.
Wall Street is heading for records after an update said U.S. households are feeling a bit less pain from inflation than feared. The S&P 500 climbed 1% Friday and was on track to top its all-time high set earlier this month. The Dow Jones Industrial Average jumped 529 points, and the Nasdaq composite rose 1.3%. Both are also heading toward records. The inflation data could clear the way for the Federal Reserve to keep cutting interest rates in hopes of helping the slowing job market. A strong earnings reports from Ford Motor and continued gains for AI stars also drove stocks higher.
Federal Reserve Chair Jerome Powell says that a sharp slowdown in hiring poses a growing risk to the U.S. economy.
Three researchers who probed the process of business innovation have won the Nobel memorial prize in economics for explaining how new products and inventions promote economic growth and human welfare, even as they leave older companies in the dust.
U.S. stocks are rising and recovering some of their sell-off from Friday. The S&P 500 climbed 1.6%.
President Donald Trump says “there seems to be no reason” to meet with Chinese leader Xi Jinping as part of an upcoming trip to South Korea after China restricted exports of rare earths needed for American industry. The Republican president suggested Friday he was looking at a “massive increase” of import taxes on Chinese products in response to Xi’s moves. Trump says one of the policies the U.S. is calculating is "a massive increase of Tariffs on Chinese products coming into the United States." A monthslong calm on Wall Street was shattered, with U.S. stocks falling on the news. The Chinese Embassy in Washington hasn't responded to an Associated Press request for comment.
