NASDAQ leads stock decline as oil prices soar due to Iran attack

Super Micro Computer (SMCI) fell more than 3% on Tuesday after the company conducted a 10-for-1 stock split after the market closed on Monday.

Stock splits, which increase the number of shares outstanding (thus lowering the overall price per share), are becoming increasingly popular as companies seek to increase accessibility to attract more investors.

Other mega-cap stocks have also adopted this strategy, including chipmaker Nvidia (NVDA) and retailer Walmart (WMT).

Tuesday’s decline came after the AI ​​server maker’s stock price fell by double digits last week after the Wall Street Journal reported that the U.S. Department of Justice was investigating the company for possible accounting violations.

Oil prices soared on Tuesday after Iran fired more than 100 ballistic missiles at Israel, sending prices to their highest level in almost a year.

West Texas Intermediate (CL=F) rose more than 5% to trade just below $72 a barrel. Brent crude oil (BZ=F), the international standard price, has also risen by about 5%, firmly exceeding $75 per barrel.

One concern about rising oil markets is the impact on inflation, as long-term increases in energy prices often increase the cost of inputs for goods and services. This could lead to further price increases across the board, including in categories other than energy.

“There’s still a lot of uncertainty,” said James Riley, senior market economist at Capital Economics, after Tuesday’s price spike.

He argued that the key question would be the scale of the attack and whether it would cause significant damage, especially to civilian areas. A significant escalation by Iran risks drawing the United States into war, which Iran will likely seek to avoid.

The economist noted that Iran accounts for about 4% of global oil production, adding: “In any case, the impact on oil prices will continue to be the main transmission channel to the global economy.” Ta. “A key consideration will be whether Saudi Arabia will increase production if Iranian supplies are disrupted.”

Riley said as a rule of thumb, a 5% increase in oil prices increases headline inflation by about 0.1 percentage point in developed countries like the United States.

“Therefore, we believe a significant (and sustained) increase in oil prices will be required to influence central bank policy.”

Energy (XLE) and Utilities (XLU) led the sector’s moves on Tuesday, rising about 1.8% and 0.4%, respectively.

Energy prices rose on Tuesday morning as crude oil (CL=F) soared about 4% to trade at just under $71 a barrel after headlines said Iran was preparing a missile attack on Israel. Stocks rose significantly. The international standard price, Brent (BZ=F), has also risen and remains above $74.

Meanwhile, the utilities sector, one of the most defensive sectors of the economy, has been gaining momentum in recent months amid an artificial intelligence boom. It is also attracting attention as a hedge against the possibility of an economic downturn.

Technology stocks (XLK) were the biggest laggards of the day, with the Nasdaq Composite Index down nearly 2% in afternoon trading. In the technology industry, Apple (AAPL) and Nvidia (NVDA) were the biggest losers. Both stocks fell more than 3%.

A strike by longshoremen began early Tuesday on the East Coast and Gulf Coast, halting half of U.S. shipping and threatening to cost the economy billions of dollars a day.

Ryan Petersen, Flexport’s founder and CEO, said of Yahoo Finance’s market dominance before the strike began: “If it lasts for a few days or a week or more, there will be a huge cascading effect. It will come out,” he said.

He said 15% of the world’s container ships could be grounded, resulting in a “significant reduction in shipping capacity” and supply chain disruptions “much more severe” than the U.S. economy experienced during the pandemic. It was pointed out that it could cause

But Eugenio Aleman, chief economist at Raymond James, doesn’t expect the strike to accelerate inflation, which is the biggest concern as the halt officially begins.

“The strike affects approximately 40% of U.S. container volumes and comes at an inopportune time, ahead of the important holiday shopping season and election, but like the 2021-2022 port closures, it is likely to result in substantial inflation,” Aleman said. It is not intended to promote.” New notes on Tuesday.

“The reason is slower consumer demand. Slower job growth, more discerning consumers, and expected lower shelter costs should limit the upside impact. ”

Read more about the strike and its impact on the economy, politics, and more.

Oil prices rose on Tuesday morning following headlines that Iran was preparing a missile attack on Israel.

West Texas Intermediate (CL=F) rose about 3% to trade above $70 a barrel. Brent crude oil (BZ=F), the international benchmark price, also rose by about 2% and remains at a level slightly below $74 per barrel.

“The United States has indications that Iran is preparing imminently for a ballistic missile attack against Israel,” a senior White House official said in a statement cited by multiple news outlets. “We are actively supporting defense preparations to protect Israel from this attack. A direct military attack on Israel from Iran would have serious consequences for Iran.”

Tensions have risen in the Middle East in recent days after Israel launched ground air strikes in southern Lebanon targeting the Iranian-backed militant group Hezbollah.

Stocks fell on the possibility of a missile attack and mixed employment and economic data released early Tuesday, with the tech-heavy Nasdaq leading the decline.

The number of job openings rose surprisingly in August, further reinforcing the idea that although the labor market is cooling, it is not slowing down rapidly.

There were 8.04 million job openings at the end of August, up from 7.71 million in July, according to new data from the Bureau of Labor Statistics released Tuesday. Economists surveyed by Bloomberg expected the report to show a slight increase in job openings in August to 7.67 million.

July’s figures have been revised upward from the originally announced number of 7.67 million job openings.

According to the Job Openings and Labor Turnover Survey (JOLTS), the number of employed people in the same month was 5.31 million, down from 5.41 million in July. The hiring rate in August was 3.3%, down from 3.4% in July. Tuesday’s report also showed the turnover rate, a sign of worker confidence, fell to 1.9%, the lowest level since June 2020.

U.S. stocks started lower on Tuesday, the first trading day of the October fourth quarter.

The Dow Jones Industrial Average (^DJI) fell about 0.4%, and the S&P 500 (^GSPC) fell about 0.3% as both major indexes hit new closing highs on Monday. The Nasdaq Composite Index (^IXIC), which has a high proportion of high-tech stocks, also fell, dropping about 0.3%.

Jeep maker Stellantis (STLA) fell 1% in pre-market trading Tuesday after announcing a recall of more than 150,000 hybrid Jeep SUVs due to “potential fire hazards.”

The drop in Stellantis shares comes just one day after the stock plummeted 12.5% ​​on a bleak outlook for the company’s North American operations. Stellantis, which also makes Dodge and Ram vehicles, said it expects full-year profit margins to be between 5.5% and 7%, rather than its previous double-digit outlook. To survive the deteriorating situation in the global auto industry, automakers are planning cost-cutting measures and discounts, Yahoo Finance reporter Pras Subramanian explained about market dominance.

Meanwhile, the newly issued recall affects the 2020-2024 Jeep Wrangler 4xe and the 2022-2024 Jeep Cherokee 4xe SUV. The company said an internal investigation found 13 fires related to the issue, but estimates that only 5% of recalled vehicles pose a fire risk.

Barclays analyst Tim Long dropped the mic on Apple (AAPL) in a new note this morning, calling out weak demand for the iPhone 16.

Here’s what Long has to say:

Long reiterated his underweight rating (equivalent to sell) on Apple.