Dow Drops 617 Points as Oil Prices Soar Amid Middle East Tensions
The Dow Jones Industrial Average plummeted 617 points on Tuesday as renewed tensions in the Middle East pushed oil prices higher. The benchmark index dropped to 52,797.10, a decline of 1.16%. The S&P 500 fell 0.58% to 7,673.94 and the Nasdaq Composite declined 0.31% to 26,423.69.
The increase in oil prices, driven by attacks on Saudi energy facilities and cities by Iran-backed Houthis in Yemen, has become a major concern for investors. Higher energy costs could add to inflationary pressures, making stocks less attractive compared with risk-free government securities. The S&P 500 energy index gained during the session, however, with Marathon Petroleum and Occidental Petroleum among the stocks advancing.
Investors are awaiting the US producer price index and consumer price index for August, due Thursday and Friday, respectively. These reports will provide further clues about the direction of inflation before the Federal Reserve’s September 15-16 meeting. Fed funds futures were pricing in a 60% probability of a 25-basis-point rate hike at the meeting.