Dow Jones Plummets Amid Geopolitical Strains and Rising Crude Prices
On Tuesday, US equity markets faced another wave of risk-off selling, with the Dow Jones Industrial Average tumbling 628 points, a 1.2% drop. The decline was driven by escalating trade tensions in North America and ongoing conflicts in the Middle East, which are fueling investor caution. All three major indexes closed lower as market participants await the consumer price index (CPI) and producer price index (PPI) releases scheduled for later this week.
Heightened concerns about oil supply disruptions pushed West Texas Intermediate (WTI) crude futures up 2.4% to $93.65 per barrel, while Brent crude edged closer to the $100 mark, settling near $99.45. These oil price gains have intensified inflation worries, influencing Treasury yields. The two-year US Treasury yield rose by 1.7 basis points to 4.396%, with the 10-year and 30-year yields inching up to 4.794% and 5.251%, respectively.
Fed Rate Hike Expectations Remain Elevated Ahead of Inflation Reports
Following last month’s robust employment data, market odds for a 25-basis-point rate increase at the Federal Reserve’s upcoming meeting have climbed to around 60%, up notably from prior estimates. CME Fed funds futures indicate that rate hike bets firmed compared to the previous session. Investors are closely watching the forthcoming inflation data for signals on the Fed’s policy trajectory.
Chris Larkin, Managing Director at Morgan Stanley’s E*TRADE, noted that geopolitical uncertainties and surging oil prices have sharpened market focus on inflation trends, with any indication of easing inflation likely to receive a favorable market response.
Semiconductor Sector Shines Despite Market Weakness; Intel Surges Over 9%
While overall market sentiment was downbeat, utilities led sector gains, with energy and real estate sectors also showing resilience. Most technology stocks softened, yet the semiconductor sub-sector bucked the trend. Intel (INTC) announced a 10% product price increase aimed at preserving margins, prompting a 9.1% rise in its stock price.
Gus Richard, an analyst at Northern Securities, upgraded Intel from hold to buy, citing meaningful progress in its transformation strategy and strong pricing power amid chip supply constraints. Peers Advanced Micro Devices (AMD) and Marvell Technology gained 5.9% and 0.8%, respectively.
At market close, the Nasdaq Composite slipped 0.3% to 26,421 points, the S&P 500 dropped 0.6% to 7,673 points, and the Dow fell 1.2% to 52,786 points.
Amgen Experiences Largest Single-Day Drop in Nearly 26 Years Following Novartis Clinical Trial Failure
Biopharmaceutical giant Amgen (AMGN) saw its shares plummet 10.1%, marking its steepest single-session decline since 2000. The selloff followed Novartis’s (NVS) announcement that its cardiovascular drug Pelacarsen failed to meet endpoints in a Phase III clinical trial, sparking concerns over the outlook for Amgen’s similar drug Olpasiran.
Evan Siegerman, equity analyst at BMO Capital Markets, highlighted that despite Amgen’s year-to-date outperformance against the S&P 500, investors remain cautious given upcoming patent expirations. He downgraded Amgen to hold, maintaining a $450 price target that still implies more than 14% upside from Tuesday’s close.
Data from Dow Jones Market indicates Amgen's last comparable single-day percentage decline occurred on October 27, 2000.
This week’s market trajectory will remain sensitive to US inflation data and Federal Reserve policy updates amid ongoing geopolitical uncertainties, with investor risk appetite and capital flows continuing to display volatility.