U.S. equities retreated Tuesday as persistent inflation concerns, fueled by a surge in oil prices amid escalating Middle East tensions, disproportionately pressured interest-rate-sensitive technology shares.
The Nasdaq 100, a bellwether for tech stocks, fell 1.29% to 29,077.22 points, while the broader S&P 500 declined 0.71% to 7,631.47. The Dow Jones Industrial Average dropped 0.79% to 52,766.88, extending losses from the start of the week. The Nasdaq had briefly bucked the trend with a modest gain on Monday.
A sharp rise in oil prices, driven by reports of U.S. military strikes against Iran in response to recent attacks on shipping in the Strait of Hormuz, heightened inflationary pressures. The renewed geopolitical risks dashed earlier hopes of a swift reopening of the critical maritime chokepoint. "The elevated oil prices risk reigniting inflation, which in turn increases the likelihood of tighter monetary policy," said Fawad Razaqzada of Forex.com. The concurrent rise in global bond yields further dampened appetite for risk assets, as higher yields make fixed-income investments more attractive relative to equities.
Investors also turned cautious ahead of Friday’s U.S. jobs report, with unexpectedly strong labor data potentially reinforcing expectations for a Federal Reserve interest-rate hike. "Strong August payrolls could be interpreted as bad news by markets, as it may strengthen the case for a rate increase," noted Chris Larkin of E*Trade.
Among individual movers, Apple led gains on the Dow, rising 2.6% after new CEO John Ternus highlighted the company’s robust product pipeline and teased a "phenomenal" iPhone launch next week. Media reports have also suggested Apple may enter the foldable smartphone market.
Fervo Energy surged over 28% following a power supply agreement with Google’s Alphabet. S&P Global gained 1% after Bloomberg reported the financial data firm is exploring a spinoff of its Capital IQ Pro platform, which could form a standalone company valued at several billion dollars. GoPro jumped 40%, reclaiming the $1 per share threshold for the first time since early June, after finalizing a merger agreement with privately held Starman Optical.
The declines underscore the dual headwinds facing markets: geopolitical instability stoking commodity prices and the specter of tighter financial conditions.
