Dow drops 628.18 points amid inflation concerns

In Short:
– U.S. stocks fell due to rising oil prices and geopolitical tensions, with the Dow down 628.18 points.
– Increasing energy costs raise inflation concerns, influencing upcoming Federal Reserve monetary policy decisions.

Stocks fell as the market began the week with rising oil prices and geopolitical tensions.The Dow Jones Industrial Average dropped 628.18 points, or 1.18%, closing at 52,786.07.

This marked a second consecutive day of losses following a decline of 272 points last Friday.

The S&P 500 fell 0.58% to 7,673.52, while the Nasdaq Composite decreased 0.32% to 26,421.41.

Stocks decline sharply

U.S. markets were closed Monday for the Labor Day holiday.

Oil prices have risen for six consecutive days amid tensions between the U.S. and Iran.

Brent crude oil futures rose nearly 1% to $97.92 per barrel.

The increase in energy costs has heightened concerns over upcoming inflation data expected this week.

The producer price index and consumer price index for August will be released on Thursday and Friday.

Traders expect inflation data to influence the Federal Reserve’s monetary policy decisions next week.

Currently, Fed funds futures suggest a 59% chance of a quarter-percentage point rate hike after the September 15-16 meeting.

“If you have a CPI reading that surprises to the upside, that’s going to really make it difficult for them not to hike rates,” stated Mark Hackett, chief market strategist at Nationwide.

Semiconductors provided some relief, with the VanEck Semiconductor ETF (SMH) rising 1.2%.

Intel and Advanced Micro Devices shares surged 9.1% and 5.9%, respectively, while Broadcom gained 3%.

Increasing energy prices led to higher Treasury yields, with the benchmark 10-year note yield reaching its highest since November 2023.

Traders face renewed trade tensions, as Canadian tariffs on approximately $20 billion of U.S. goods begin on Tuesday.

President Trump responded, stating Bombardier must adjust its production strategy to maintain U.S. market access.