Dow Slides Amid Escalating Middle East Tensions and Rate Hike Expectations

The US stock market started the holiday-shortened week on a negative note, as traders grappled with escalating tensions in the Middle East and higher expectations of Federal Reserve interest rate hikes.

The Dow Jones Industrial Average shed 0.9% to 52,912.54 points, while the tech-heavy NASDAQ put in a better performance, falling just 0.1% to 26,488.28 points.

The strong US labor market and stubbornly high inflation have led investors to bet on a rate hike by the Fed this month, with odds standing at around 60%, according to the CME FedWatch tool.

The upcoming August producer price index (PPI) and consumer price index (CPI) reports will be closely watched for their impact on the Fed's decision on September 16.