With military clashes between the United States and Iran flaring up again after a month, New York stocks opened lower across the board.
As of 10:14 a.m. on the 31st (local time) on the New York Stock Exchange (NYSE), the Dow Jones Industrial Average fell 352.62 points, or 0.66%, to 53,207.37 from the prior session.
The Standard & Poor's (S&P) 500 fell 36.97 points, or 0.48%, to 7,674.51 in trading, and the Nasdaq composite also dropped 121.18 points, or 0.46%, to 26,281.25.
Investor sentiment was crushed as the United States and Iran exchanged attacks again after about a month, heightening tensions in the Middle East.
On the 30th, U.S. forces carried out airstrikes on two rocket launchers for laying naval mines belonging to the Islamic Revolutionary Guard Corps on Larak Island in Iran. In response, on the 31st, Iran struck Jordan and the United Arab Emirates (UAE), where U.S. military bases are located, in a tit-for-tat move.
Tension also rose as U.S. President Donald Trump signaled further action. In an interview with Fox News that day regarding Iran's attack on a U.S. base in Jordan, President Trump said, "There will be a response," adding, "We will hit them hard."
The renewed spotlight on the possibility of a benchmark interest rate hike by the U.S. Central Bank, the Federal Reserve (Fed), also weighed on the market.
Federal Reserve Chair Kevin Warsh recently said at the Jackson Hole Economic Policy Symposium, "We need to be confident that underlying inflation is moving clearly and at a sufficient pace toward our goal," adding, "If not, we have work to do."
Since then, expectations have strengthened in the market that the Fed's monetary policy could tilt more hawkish than expected.
According to CME FedWatch, the probability of holding the benchmark rate steady in September implied by the federal funds futures market stood at 35.9% that day. That is a sharp drop from last week, when the odds of a hold were nearing 60%.