US stocks slipped on Wednesday as escalating Israel-Iran tensions fanned worries about a wider Middle East conflict, prompting caution in the market.
The S&P 500 (^GSPC) fell about 0.3%, while the Dow Jones Industrial Average (^DJI) slid about 0.2%, as investors braced for Israel’s promised retaliation for a massive missile attack by Iran. The Nasdaq Composite (^IXIC) was also about 0.2% lower.
Stocks have kicked off October under pressure as geopolitical concerns grip the market, dispelling the upbeat mood around hopes for US interest-rate cuts. At the same time, oil has extended a surge that saw prices spike over 5% on Tuesday, the most in almost a year.
Brent crude (BZ=F) and West Texas Intermediate (CL=F) futures were both up around 3% on Wednesday, with traders paying a premium amid the prospect of risks to supply from heightened Israel-Iran attacks.
In focus are the chances the run-up in oil prices could push up US inflation, disrupting the progress made by the Federal Reserve. At the same time, Mideast tensions and the US port strike risk hampering supply chains, spurring concerns about the US economy — just when investors were becoming confident in a “soft landing.”
The latest data from ADP out Wednesday showed the private sector added 143,000 jobs in September, above economists’ estimates for 125,000 and significantly higher than the 99,000 seen in August. The release follows mixed data around job openings and comes ahead of the crucial September jobs report on Friday as investors mull the Fed’s interest-rate-cutting path.
Read more: What the Fed rate cut means for bank accounts, CDs, loans, and credit cards
Meanwhile, Nike (NKE) shares slid 7% after the sport shoe giant withdrew its outlook for the year, having fallen short on first quarter revenue. “We have yet to turn the corner,” its CFO told analysts on a conference call.
Tesla’s (TSLA) global deliveries rose in the third quarter, but fell short of Wall Street estimates. The EV maker’s shares fell after the report.
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