The S&P 500 Index is down 0.54% today, alongside a 0.32% drop in the Dow Jones Industrial Average and a 0.96% decline in the Nasdaq 100, marking new 5-week lows. This downturn is attributed to rising energy prices, with WTI crude oil climbing over 3% to a 3.5-month high, spurred by ongoing geopolitical tensions, particularly fears of an escalating US-Iran conflict. Additionally, significant bond yields have reached multi-year highs, exemplified by the UK Gilt at 5.34%, the German Bund at 3.49%, and the US 10-year T-note at 4.92%.
US economic data released today shows that the Producer Price Index (PPI) for August rose by 5.4% year-on-year, above the expected 5.3%, while initial jobless claims dropped to 206,000, just shy of the 205,000 forecast, indicating a stable labor market. The ongoing trade tensions between the US and Canada are also affecting market sentiment, as both nations have recently enacted tariffs on each other’s goods.
Markets are currently pricing in a 70% chance of a 25 basis point rate hike in the upcoming Federal Open Market Committee meeting on September 15-16. In action among US stocks, chipmakers and AI infrastructure stocks suffered losses, with CoreWeave down over 6%, while defensive healthcare stocks saw gains, led by Centene, which rose over 5%.
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