[New York Stock Exchange] Hormuz Tensions Flare Anew...Markets Decline Across the Board

International Oil Prices Rise Over 3 Percent
Concerns Grow Over Potential Rate Hikes

As military clashes between the United States and Iran resumed, international oil prices surged, prompting the three major U.S. stock indices to decline simultaneously on August 31 (local time) at the New York Stock Exchange.

At 9:45 a.m. at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average was trading at 53,250.50, down 309.49 points (0.58%) from the previous session. The S&P 500 index, which focuses on large-cap stocks, fell by 33.17 points (0.44%) to 7,677.59, while the tech-heavy Nasdaq index dropped by 113.17 points (0.43%) to 26,289.24.

New York Stock Exchange. New York, USA – Special Correspondent Yoonju Hwang

The previous day, the United States Central Command (CENTCOM) confirmed that U.S. forces had struck two rocket launchers located on Larak Island in the Strait of Hormuz in southern Iran. This attack marks the first publicly confirmed U.S. strike inside Iran since the U.S. halted its military operations against Iran at the end of July.

Iran immediately retaliated. Iranian state media reported that, in response to the U.S. attack on Larak Island, Iranian forces struck a U.S. military base in Jordan. With direct military confrontation between the U.S. and Iran resuming for the first time in over a month, tensions surrounding the Strait of Hormuz are once again intensifying.

Amid rising geopolitical risks in the Middle East, international oil prices soared. On the New York Mercantile Exchange, U.S. West Texas Intermediate (WTI) crude for October delivery jumped more than 3%, trading above $86 per barrel. On the ICE Futures Exchange, Brent crude for November delivery also climbed over 3%, surpassing $91 per barrel.

Persisting inflation concerns also pushed U.S. Treasury yields to their highest levels in years, adding further pressure on the stock market. Although the U.S. Treasury Department announced plans to expand bond buybacks (early repurchases) to stabilize the government bond market, long-term yields have remained elevated.

Hawkish remarks by Federal Reserve Chair Kevin Warsh further contributed to rate concerns. On August 28, during an economic policy symposium in Jackson Hole, Wyoming, Warsh stated, "This summer's inflation readings were better than expected, but they do not indicate a meaningful improvement in the underlying trend," expressing caution regarding inflation. He also left open the possibility of additional tightening if inflation does not slow quickly enough toward the Fed's 2% target.

As a result, expectations for a September rate hike are rapidly spreading throughout the market. Following Warsh's statements, Barclays revised its outlook, forecasting the Fed will raise the benchmark interest rate by 0.25 percentage points in both September and December. The probability for a September rate hike, as reflected in the CME FedWatch tool, has also risen to nearly 60%.

This week, market attention is expected to focus on U.S. employment data. The August employment report, to be released on the 4th, is anticipated to be a key factor in the Fed's September rate decision. In addition, manufacturing and service sector economic indicators will be released in succession.

The G20 Finance Ministers and Central Bank Governors Meeting is also a variable. The meeting, held in Asheville, North Carolina, from August 31 to September 1, will address key issues such as global economic growth, debt challenges, and economic sanctions against Iran.

This content was produced with the assistance of AI translation services.