

Market Analysis
The S&P 500 dropped on Tuesday as concerns over a potential escalation in the Middle East prompted investors to shy away from riskier assets. The decline came after Iran launched missiles at Israel, intensifying fears of a broader regional conflict.
By the close of trading at 4:00 p.m. ET (2000 GMT), the Dow Jones Industrial Average had fallen 173 points, or 0.4%, while the S&P 500 was down 1%, and the NASDAQ Composite dropped 1.5%.
Despite this dip, all three major Wall Street indices had posted gains in September and the third quarter, marking the first positive September for the S&P 500 since 2019. So far this year, the S&P 500 has risen more than 20%—a milestone last seen in 1997 over the first nine months.
Iran Escalates Conflict with Missile Strikes
Iran launched ballistic missiles at Israel on Tuesday, further escalating tensions in the Middle East, a region rich in oil resources. The Israeli military confirmed the attack, raising concerns about potential involvement from other regional powers and the U.S. Iran had reportedly notified international parties of the timing and scope of the strike, according to Sky News Arabia.
In response, Israel announced plans for significant airstrikes, hinting that retaliatory action against Tehran could be imminent. This comes as Israeli forces continue "limited" raids against Hezbollah targets along the Lebanese border.
Fears of a larger Middle East conflict pushed oil prices higher due to potential supply disruptions, while defense stocks surged. Companies such as Lockheed Martin (NYSE), Northrop Grumman (NYSE), and L3Harris Technologies (NYSE) all saw significant gains.
Powell Tempers Rate Cut Expectations
The stock market's shaky start to the month also followed comments from Federal Reserve Chair Jerome Powell, who downplayed expectations for an aggressive rate cut in the near term. Powell indicated the Fed is not in a rush to reduce rates swiftly, emphasizing that any rate reductions would happen gradually.
Goldman Sachs strategists interpreted Powell’s remarks as aligning with their forecast for 25-basis-point cuts in both November and December, though they acknowledged that the November cut could still be a "close call."
Last month, the Fed initiated its policy shift with a 50-basis-point cut, the first rate reduction since 2020.
Economic Data in Focus
Investors are also sifting through a heavy slate of U.S. economic data this week to gauge how the Fed might proceed with further rate cuts. The closely watched Job Openings and Labor Turnover Survey (JOLTS) is expected to show 7.64 million available positions in August.
Later in the week, the Institute for Supply Management’s manufacturing and services PMI data for September will provide additional insight into the state of the U.S. economy. The week wraps up with Friday's October nonfarm payrolls report, where economists predict 144,000 new jobs were added to the U.S. economy.
Corporate News: CVS Health and Boeing
On the corporate front, CVS Health (NYSE) saw its stock drop 2% following a Reuters report that the company is considering splitting its retail and insurance divisions. Discussions with financial advisors have been ongoing in recent weeks, according to sources familiar with the matter.
Meanwhile, Boeing Co. (NYSE) trimmed earlier losses to rise 1%, despite reports from Bloomberg that the aircraft maker is contemplating a $10 billion stock sale to strengthen its balance sheet.
Paraphrasing text from "Investing" all rights reserved by the original author.