DISCLAIMER: GoldInvestors.news is not a registered investment, legal or tax advisor or broker/dealer. All investment/financial opinions expressed by GoldInvestors.news are from the personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors and misprints may occur.

Wall Street opened the shortened trading week with a sharp retreat Tuesday as escalating conflict between the United States and Iran pushed crude oil higher and revived fears that stubborn inflation will force the Federal Reserve to tighten monetary policy again.

The Dow Jones Industrial Average plunged 641 points, or 1.2%, after initially opening down more than 500 points. The S&P 500 and Nasdaq Composite each declined roughly 0.4% following Monday’s Labor Day market closure.

Oil remained the central pressure point for investors. West Texas Intermediate crude advanced for a sixth consecutive session, its longest winning streak since March, while Brent crude hovered near $98 per barrel as traders assessed the latest military strikes.

The United States struck three Iranian oil tankers Saturday after Iran fired ballistic missiles at two American Navy warships. Iran’s Foreign Ministry condemned the tanker attacks as a “war crime” and an act of “economic warfare.”

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“This appears to be a major escalation and tensions have once again ratcheted higher,” said David Morrison, senior market analyst at Trade Nation. Energy Secretary Chris Wright also warned that Washington may be unable to reach an agreement preventing Iran from obtaining a nuclear weapon.

President Donald Trump argued that energy prices would “drop precipitously” after an American victory, predicting gasoline could retreat to $3 per gallon and eventually below $2. Until that happens, however, rising fuel costs threaten consumers, corporate margins, and the Federal Reserve’s inflation fight.

Investors are now focused on the producer price index Thursday and consumer price index Friday. Fed funds futures indicated a 58% probability that policymakers will raise interest rates by a quarter percentage point following the September 15 and 16 meeting, according to CME Group’s FedWatch tool.

“If you have a CPI reading that surprises to the upside, that’s going to really make it difficult for [the Federal Reserve] not to hike rates,” Nationwide chief market strategist Mark Hackett said. “And that is effectively what investors are focused on right now.”

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Higher energy prices also pushed sovereign bond yields upward. The benchmark 10 year Treasury yield recently reached its highest level since November 2023, while the 2 year yield climbed to a level not seen since January 2025.

The pressure extended overseas, with France’s 30 year government bond yield reaching its highest point since April 2008. Germany’s benchmark 10 year bund yield rose to its highest level since early 2011, adding to concerns that inflation is again taking control of global markets.

Energy shares were among the session’s few clear winners. The iShares Global Energy ETF gained 1.8% to a record high, while the SPDR S&P Oil and Gas Exploration and Production ETF advanced 2.3% to its strongest level since June 2015.

Petrobras climbed more than 4%, while PetroChina and APA each gained over 3%. Those advances reflected a market increasingly rewarding companies tied to scarce physical energy while punishing sectors vulnerable to higher borrowing and operating costs.

Technology provided pockets of resistance. Qualcomm surged more than 7% after announcing a partnership with Amazon Web Services to help expand artificial intelligence infrastructure, while Intel jumped 4.7%, Broadcom gained 1.1%, and Nvidia added 0.7%.

Bloom Energy rose more than 6% ahead of its scheduled addition to the S&P 500 on September 21. The fuel cell producer has benefited heavily from expanding power demand at artificial intelligence data centers, helping its shares soar approximately 190% this year.

Health care delivered some of the day’s harshest losses. Novartis tumbled about 12% after a late stage study found its del desiran treatment produced no “significant improvement” for patients with myotonic dystrophy type 1, marking the company’s third clinical setback in one week.

Roivant Sciences moved in the opposite direction, rallying 24% after reporting that subsidiary Pulmovant’s mosliciguat achieved “a clinically meaningful and statistically significant placebo-adjusted reduction in pulmonary vascular resistance” among certain pulmonary hypertension patients. Lockheed Martin also gained after UBS upgraded the defense contractor to buy.

Trade friction added another layer of uncertainty as Canadian retaliatory tariffs on about $20 billion of American goods took effect Tuesday. Trump warned that aircraft manufacturer Bombardier must produce in the United States if it wants access to the American market, writing, “NO MORE SELLING BOMBARDIER IN THE UNITED STATES!”

International equities broadly weakened, with major indexes in Japan, South Korea, China, Hong Kong, and Europe finishing lower. The selloff illustrated how quickly expensive oil, elevated yields, geopolitical conflict, and protectionist disputes can overwhelm enthusiasm surrounding artificial intelligence and selected corporate earnings.

China reported export growth of 25% from a year earlier, while imports increased 28.2% and missed expectations. The country’s trade surplus expanded to $119.09 billion, highlighting continued dependence on exports as domestic demand remains sluggish.

The Japanese yen strengthened to roughly 153 per dollar following more forceful signals from the Bank of Japan. With inflation reports approaching and crude nearing $100, markets face a difficult calculation in which renewed rate increases could become the price of failing to contain another energy driven inflation wave.

DISCLAIMER: GoldInvestors.news is not a registered investment, legal or tax advisor or broker/dealer. All investment/financial opinions expressed by GoldInvestors.news are from the personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors and misprints may occur.