The S&P 500 Index ($SPX) (SPY) closed down -0.58% on Tuesday, the Dow Jones Industrial Average ($DOWI) (DIA) closed down -1.18%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -0.12%. E-mini S&P futures (ESU26) fell -0.57%, and September E-mini Nasdaq futures (NQU26) fell -0.10%.
Stock indexes settled lower on Tuesday as rising Middle East tensions pushed crude prices higher and stoked inflation worries. Crude oil prices rose more than +1% to a 3-month high on Tuesday, boosting inflation expectations and strengthening expectations that central banks will have to keep raising interest rates to contain inflation. Rising geopolitical tensions in the Middle East are also dampening market sentiment after the US and Iran exchanged attacks over the weekend and after Houthi rebels on Tuesday launched attacks on several Saudi Arabian oil facilities.
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Also, an escalating trade war between the US and Canada is weighing on market sentiment. On Tuesday, Canada imposed tariffs of 15% to 50% on hundreds of US goods in retaliation for the action by the US last month to impose 50% tariffs on $20 billion of imports from Canada.
On the positive side for equities, chipmakers and AI-infrastructure stocks moved higher, and energy stocks rallied, limiting losses in the overall market.
Tuesday’s US economic news showed that July consumer credit rose +$18.062 billion, stronger than expectations of +$11.340 billion.
Chinese trade news was weaker than expected, weighing on global economic growth prospects. China Aug imports rose +28.2% y/y, weaker than expectations of +31.0% y/y. Also, Aug exports rose +25.0% y/y, weaker than expectations of +25.9% y/y.
Oct WTI crude oil prices (CLV26) closed up more than +1% on Tuesday and posted a 3-month high. Crude prices rose after the US and Iran exchanged attacks in the Strait of Hormuz over the weekend. Also, Saudi Arabia said that attacks from Yemen's Houthi rebels on Tuesday halted operations at several oil facilities. Saudi Arabia's 400,000 bpd Jazan refinery, which had halted operations in July after an earlier attack, was attacked again today with missiles and drones. Also, the rebels launched attacks at Saudi Aramco facilities in Abha and Najran, causing fires and injuring several people. Crude prices extended their gains Tuesday afternoon after Fox News reported the US struck targets near Kharg Island and the Iranian port city of Jask.
The markets are discounting a 62% chance of a +25 bp rate hike at the next FOMC meeting on September 15-16.
Overseas stock markets settled mixed on Tuesday. The Euro Stoxx 50 closed up +0.14%. China's Shanghai Composite closed up +0.20%. Japan's Nikkei-225 Stock Average fell from a 1-week high and closed down -1.70%.
Interest Rates
December 10-year T-notes (ZNZ6) closed down by -5 ticks on Tuesday. The 10-year T-note yield rose +2.0 bp to 4.802%. T-notes moved lower on Tuesday after WTI crude oil rose more than +1% to a 3-month high, which boosted inflation expectations. Supply pressures also weighed on T-note prices as the Treasury will auction $119 billion in T-notes and T-bonds this week.
T-notes recovered from their worst level after Tuesday’s $58 billion Treasury auction of 3-year T-notes was met with firm demand. The auction had a bid-to-cover ratio of 2.72, above the 10-auction average of 2.65. Weakness in stocks on Tuesday also boosted safe-haven demand for T-notes.
European government bond yields moved lower on Tuesday. The 10-year German bund yield fell from a 15-year high of 3.398% and finished down -2.0 bp at 3.366%. The 10-year UK gilt yield fell -0.2 bp to 5.173%.
German trade news was weaker than expected. German July exports unexpectedly fell -0.8% m/m, weaker than expectations of a +0.3% m/m gain. Also, July imports fell -5.7% m/m, weaker than expectations of -1.0% m/m and the biggest decline in 6.25 years.
Markets are discounting a 100% chance of a +25 bp ECB rate hike at its next policy meeting on September 10.
US Stock Movers
Software stocks were under pressure on Tuesday, weighing on the broader market. Atlassian Corp (TEAM) closed down more than -6% and Thomson Reuters (TRI) closed down more than -5%. Also, Intuit (INTU), ServiceNow (NOW) and Workday (WDAY) closed down more than -4%, and Salesforce (CRM) and Adobe Systems (ADBE) closed down more than -3%. In addition, Autodesk (ADSK), Datadog (DDOG), and Palantir Technologies (PLTR) closed down more than -2%, and Microsoft (MSFT) closed down more than -1%.
Biotechnology companies sold off Tuesday after Novartis suffered its third clinical-trial setback in a week after a treatment for a muscle-wasting disease failed in a late-stage study. Dyne Therapeutics (DYN) closed down more than -15%, and Amgen (AMGN) closed down more than -10% to lead losers in the Dow Jones Industrials and Nasdaq 100. Also, Sarepta Therapeutics (SRPT) closed down more than -7%, Royalty Pharma (RPRX) closed down more than -5%, and Ionis Pharmaceuticals (IONS) closed down more than -3%.
Chipmakers and AI-infrastructure stocks moved higher on Tuesday. The iShares Semiconductor ETF (SOXX) closed up more than +1% at a 2.5-week high. CoreWeave (CRWV) closed up more than +11% to lead gainers in the Nasdaq 100, and Intel (INTC) is up more than +8%. Also, Seagate Technology Holdings Plc (STX) closed up more than +6%, and Advanced Micro Devices (AMD) closed up more than +5%. In addition, Lam Research (LRCX) closed up more than +4%, and Applied Materials (AMAT), ARM Holdings (ARM), and Qualcomm (QCOM) closed up more than +3%, and Broadcom (AVGO), ASML Holding NV (ASML), and Western Digital (WDC) closed up more than +2%.
Stryker (SYK) closed down more than -8% after executives flagged continuing challenges in its peripheral vascular and joint replacement businesses at an industry conference.
Shopify (SHOP) closed down more than -7% as the Canadian cloud-based commerce platform was weighed down by escalation of US-Canada trade tensions.
Boston Scientific (BSX) closed down more than -6% after saying the cyberattack that recently affected operations is likely to have a material impact of Q3 and fiscal 2026 results.
Roivant Sciences Ltd (ROIV) closed up more than +18% after announcing that a mid-stage trial of its inhaled drug, mosliciguat, met its primary endpoint in a treatment for pulmonary hypertension associated with interstitial lung disease.
Bloom Energy (BE) closed up more than +9% after S&P Dow Jones Indices said the company will replace Molson Coors Beverage in the S&P 500, effective before the start of trading on Monday, September 21.
Pharvaris NV (PHVS) closed up more than +6% after announcing that the phase 3 trial of its drug for the prevention of hereditary angioedema attacks met its primary and secondary endpoints.
Rigetti Computing (RGTI) closed up more than +3% after signing a definitive pact with the US Department of Commerce for a $100 million award to accelerate superconducting quantum computing R&D.
Earnings Reports (9/9/2026)
AeroVironment Inc (AVAV), Chewy Inc (CHWY), Cooper Cos Inc/The (COO), Core & Main Inc (CNM), SailPoint Inc (SAIL), Sunbelt Rentals Holdings Inc (SUNB).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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