NEW YORK (AP) — U.S. stocks are falling from their records Tuesday as worries worsen about the potential for fighting in the Middle East.
The S&P 500 was down 1.1% in morning trading a day after setting an all-time high for the 43rd time this year. The Dow Jones Industrial Average was down 341 points, or 0.8%, after coming off its own record. The Nasdaq composite was 1.6% lower, as of 10:10 a.m. Eastern time.
Oil prices jumped as worries ratcheted higher that escalating tensions in the Middle East could disrupt the flow of crude from the region. Iran is preparing to “imminently” launch a ballistic missile attack on Israel, according to a senior U.S. administration official, who warned Tuesday of “severe consequences” should it take place. A barrel of benchmark U.S. crude rose 3.1% to top $70.
The worries helped drive prices lower for stocks and higher for Treasury bonds and other investments seen as safer. That in turn drove down Treasury yields, which had already been sinking following an encouraging update on inflation from Europe. The slowdown in inflation could give the European Central Bank leeway to cut interest rates more quickly.
The sharp moves on Wall Street halted, at least temporarily, what had been a run to records for U.S. stocks. They had been jumping on hopes the U.S. economy can continue to grow despite its recent slowdown, as the Federal Reserve cuts interest rates to give it more juice. The Fed last month lowered its main interest rate for the first time in more than four years, and it’s indicated it will deliver more cuts through next year.
The question is whether the cuts will ultimately come too late. The U.S. economy is still growing, but it's begun to slow after the Fed earlier kept its federal funds rate at a two-decade high in hopes of braking on the economy enough to stamp out high inflation.
A discouraging report arrived on Tuesday showing U.S. manufacturing contracted by more in September than economists expected. Manufacturing has been one of the areas of the economy hurt most by high interest rates, and the report from the Institute for Supply Management said demand continues to slow.
A separate report may have been more encouraging. It showed U.S. employers were advertising a bit more than 8 million job openings at the end of August. That was slightly more than July's number and what economists were expecting. A more comprehensive report on hiring will arrive on Friday, when the U.S. government details how many jobs U.S. employers created in September.
Besides the job market, another threat to the economy could lie in the strike by dockworkers at 36 ports across the eastern United States, which could threaten to snarl supply chains and drive up inflation.
The workers are asking for a labor contract that doesn’t allow automation to take their jobs, among other things. So far, financial markets have been taking the strike in stride. Supply chain experts say consumers won’t see an immediate impact from the strike because most retailers stocked up on goods, moving ahead shipments of holiday gift items.
In the bond market, the yield on the 10-year Treasury fell to 3.70% from 3.79% late Monday.
In stock markets abroad, European indexes swung from modest gains to losses following the report showing inflation among the 20 countries that use the euro currency came in below 2% in September for the first time in more than three years. Indexes slipped 0.6% in France and 0.3% in Germany.
Farther east, a quarterly “tankan” survey by the Bank of Japan showed more large manufacturers are still feeling optimistic about business conditions than pessimistic. Japan also reported that its unemployment rate for August fell to 2.5% from 2.7% in July, in line with market expectations.
Japan’s benchmark Nikkei 225 rallied 1.9% to claw back some of its steep 4.8% loss from the day before.
Markets in China and South Korea were shut for holidays. Mainland Chinese markets, which had their best day since 2008 on Monday, will remain closed until Oct. 7 for the National Day break.
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AP Writers Matt Ott and Zimo Zhong contributed.
