By Caroline Valetkevitch
NEW YORK (Reuters) -U.S. stocks ended lower on Tuesday, with the Nasdaq losing more than 1%, as investors turned more cautious after Iran fired missiles at Israel.
Iran launched the salvo of ballistic missiles in retaliation for Israel’s campaign against Tehran’s Hezbollah allies. In response, US President Joe Biden ordered the US military to support Israeli defenses and shoot down missiles aimed at Israel, the White House National Security Council said.
While the broader market fell, energy company shares rose along with US oil prices, which stabilized at 2.4%. Shares of ExxonMobil (NYSE:) gained 2.3%.
Defense stocks also rose, among other things Northrop Grumman (NYSE:), which rose 3%, and Lockheed Martin (N:), an increase of 3.6%. The aerospace and defense index rose to a record high. Utilities rose 0.8%.
Airline stocks fell, including Delta Air Lines (NYSE:), which fell 1.6%.
Investors avoided risk following the news from the Middle East, but indexes ended at their lows of the day.
“If we see further escalation, I could see continued market weakness because we just don’t know how far this is going to go,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.
“The risk level has increased. The markets have had a good year and people may become fearful of getting out of the market depending on what happens in the coming weeks.”
The S&P 500 fell 173.18 points, or 0.41%, to 42,156.97, the S&P 500 lost 53.73 points, or 0.93%, to 5,708.75 and fell 278.81 points, or 1 .53%, to 17,910.36.
On Monday, the three major U.S. indexes posted strong gains for September and for the quarter.
The CBOE market volatility index, Wall Street’s fear gauge, rose.
Data released early Tuesday showed U.S. job openings rebounded in August, while the Institute for Management Supply (ISM) report showed manufacturing activity in September at 47.2, versus estimates of 47. 5.
Investors were also cautious based on Thursday’s U.S. unemployment numbers and Friday’s monthly payrolls.
Traders estimate a 38% chance that the Federal Reserve will cut rates by 50 basis points in November, up from bets of about 35% on Monday but down from 58% a week ago, CME Group’s FedWatch Tool showed ( NASDAQ:) see .
The US central bank cut interest rates by 50 basis points on September 18, triggering a new easing cycle.
Investors also followed a port strike on the East Coast and Gulf Coast, halting the flow of about half of the nation’s shipping.
The strike that began on Tuesday is not expected to lead to global supply problems as deep or severe as those experienced during the COVID-19 pandemic, but it will add more economic uncertainty that Fed policymakers may assess.
Declining issues outnumbered advancing issues on the NYSE by a ratio of 1.32 to 1; on the Nasdaq, a 2.36-to-1 ratio favored the decliners.
The S&P 500 recorded 51 new 52-week highs and two new lows; the Nasdaq Composite recorded 75 new highs and 137 new lows.
Volume on U.S. exchanges was 13.16 billion shares, compared to the full-session average of 11.98 billion over the past 20 trading days.
