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US stock market: Dow, Nasdaq, S&P 500 fall as oil tops $100, Fed rate hike bets rise
US stocks fall as oil crosses $100, Fed rate hike bets rise and Iran tensions grow, while Apple’s iPhone event and US-Canada trade war stay in focus.
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US stocks turned lower at Wednesday’s opening bell as rising oil prices and changing expectations around the Federal Reserve’s September interest-rate decision put pressure on investors. The Dow Jones Industrial Average fell about 0.5%-0.6%, while the S&P 500 slipped around 0.3% and the Nasdaq Composite dropped about 0.3%-0.5% at the open.
The weakness came after a difficult session on Tuesday, when the Dow lost more than 600 points, adding to investor caution at the start of Wednesday’s trading. A major concern for Wall Street was the sharp rise in oil prices, with Brent crude moving above $100 a barrel for the first time in about two months. Brent crude futures, the global oil benchmark, rose roughly 3% to above $100 a barrel, while US benchmark WTI crude gained more than 2% to above $95 a barrel, according to Yahoo Finance.
Oil prices cross $100
Oil prices jumped as the US-Iran conflict escalated, raising fears that the fighting could cause longer disruptions to global energy supplies. The situation is especially important for oil markets because shipping through the Strait of Hormuz remains under pressure due to the threat of violence. The waterway is a key route for global oil shipments.
US-Iran conflict hits oil
Oil prices received another boost after the US military sank five Iranian crude oil tankers, according to US Central Command. The strikes came after what the US said were attempts by Iran to target US Navy carriers in the region. The latest action marked the second straight day of US attacks on Iran's shipping sector, increasing fears that the conflict could further disrupt the global energy market.
Also read: Brent oil price crosses $100: Why Middle East conflict is driving crude prices higher
Fed rate hike bets rise
Higher oil prices have also changed expectations for the Federal Reserve’s September rate decision. Investors are now more worried that higher energy costs could keep inflation elevated. Traders now see about a 60% chance of a 25-basis-point Fed rate hike this month, according to CME Group. That is slightly higher than the probability seen a day earlier.
Higher rates pressure stocks
The changing rate outlook is important for stocks because higher interest rates can make borrowing more expensive and reduce the appeal of riskier assets such as equities. With fewer major earnings reports on the calendar, inflation, oil prices and the Fed outlook became the main focus for investors on Wednesday.
Chewy, American Eagle earnings
In corporate news, Chewy reported quarterly results that were broadly in line with expectations, giving investors another earnings update to watch during the session. American Eagle Outfitters is scheduled to report after the closing bell. Its results could give investors fresh clues about US consumer spending and the health of shoppers. Another major focus for investors is Apple’s annual iPhone event, which is taking place Wednesday at 1 p.m. ET.
Apple iPhone event today
The event is particularly important because it is the first major Apple keynote led by new CEO John Ternus, who took over from Tim Cook on September 1. Ternus is expected to face major challenges at Apple, including the company's artificial intelligence strategy and supply chain operations, making his first major product event closely watched by investors.
Also read: Will Apple stock rise after the iPhone 18 launch? Here's what history says
Foldable iPhone in focus
The biggest expected product announcement is Apple’s first foldable iPhone, which could become one of the company’s biggest product launches in years. Investors are also watching for updates to the iPhone 18 Pro and Apple Watch lineup.
Investors will also pay close attention to any new details about Apple’s AI plans, as the company continues to face pressure to show progress in artificial intelligence. Apple shares have historically tended to fall on the actual iPhone launch day but perform strongly in the months afterward, according to Yahoo Finance. The stock was moving up and down Wednesday morning as investors waited for the event.
US-Canada trade war grows
The stock-market pressure is also coming from a worsening US-Canada trade dispute. Canadian retaliatory tariffs of up to 50% on around 700 US goods took effect Tuesday. The White House responded by announcing plans that could ban certain Canadian products from entering the US, including dairy products, some alcoholic beverages and motorcycles, if the dispute continues. The planned restrictions are expected to take effect on September 29 if the standoff remains unresolved, according to the White House.
The latest moves show that neither Washington nor Ottawa is currently backing down, adding another source of uncertainty for businesses and investors already dealing with higher energy prices. The White House said the planned bans would be carried out using presidential authority under Section 338 of the Tariff Act of 1930.
Bessent backs 3% growth
Treasury Secretary Scott Bessent also offered a more positive view of the US economy, saying Tuesday that the country could potentially grow its way out of its debt problems if economic growth reaches about 3% a year. “We don't have a revenue problem. We have a spending problem,” Bessent said during a Q&A at SMU Cox School of Business in Dallas.
Also read: Will the Clarity Act pass? Crypto firms and banks battle ahead of Senate vote
Bessent said that controlling government spending while achieving 3% economic growth could help the US manage its debt burden. His comments come as the US national debt has recently crossed $40 trillion, while the annual federal budget deficit is projected to exceed $2 trillion by the end of the fiscal year on September 30.
Bessent also said he expects the US economy to remain strong after the Iran conflict, pointing to signs of renewed investment and manufacturing activity. He highlighted companies including Pepsi, Winnebago and Boeing, saying new investments such as a Pepsi Frito-Lay plant expansion in Arizona, Winnebago’s purchase of a battery plant and Boeing’s increased Dreamliner capacity show that businesses are continuing to invest.
For Wall Street, the immediate focus remains on oil, inflation and the Fed, while investors also watch Apple’s product event, corporate earnings and growing trade tensions for the next major market signal.
