The Dow Jones Industrial Average slipped for the week as oil prices surged following a U.S.-Iran military escalation, even as the broader market clawed back above key moving averages by Friday. Traders now watch inflation data due September 10-11 and an expected September 16 rate decision for the next directional cue.
The Dow Jones Industrial Average fell 0.3% in last week's trading, even as the Nasdaq composite jumped 4% and the S&P 500 index edged up 0.1%. The week started poorly, with the Dow Jones and Nasdaq-100 index falling below their 50-day lines on Tuesday, but the major indexes rebounded back above their 21-day moving averages by the close.
Oil surges after U.S. strikes Iranian tankers
The U.S. hit three Iranian oil tankers on Saturday after Iran launched ballistic missiles toward two Navy warships, including an aircraft carrier, according to U.S. Central Command. The escalation came on top of oil prices that were already climbing over the past month. U.S. crude oil futures rose 9.7% to $91.48 a barrel for the week.
The 10-year Treasury yield rose six basis points to 4.78%, hitting fresh 19-month highs during the week. Markets are leaning toward a September 16 rate hike after Friday's strong jobs report. But the August PPI and CPI inflation reports on September 10-11 will likely be decisive.
Sector rotation stays whipsaw
Equal-weight benchmarks lagged the headline indexes. The Invesco S&P 500 Equal Weight ETF declined 0.8%, while the Direxion Nasdaq-100 Equal Weighted ETF sank 1.2%, a gap that reflects weakness outside Nvidia and a handful of megacaps. Chip and memory stocks rebounded late in the week, but software tumbled after the prior week's upside reversal, and fertilizer, agriculture and crypto-linked stocks moved higher.
U.S. markets stay closed Monday for the Labor Day holiday, though Dow Jones futures continue trading through the long weekend. Traders are also watching Apple's Wednesday product event. The coming inflation prints are the other item on the calendar.
Source: Investor's Business Daily
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