The three major New York stock indexes fell together on the 31st (local time) as the United States and Iran resumed military clashes after about a month.
On the New York Stock Exchange that day, the Dow Jones Industrial Average ended at 53,185.90, down 374.09 points (0.70%) from the previous session. The Standard & Poor's (S&P) 500 fell 25.62 points (0.33%) to 7,686.14, and the Nasdaq composite closed at 26,370.89, down 31.53 points (0.12%).
As tensions in the Middle East rose again, investor sentiment weakened. The United States the previous day bombed Iran's Larak Island in the Strait of Hormuz, striking two rocket launchers used by the Islamic Revolutionary Guard Corps (IRGC) to lay naval mines. Iran immediately retaliated, launching missile and drone attacks targeting U.S. military bases in Jordan and the United Arab Emirates (UAE).
According to Fox News, U.S. President Donald Trump warned Iran, which attacked U.S. military bases that day, saying it would be "hit hard," signaling large-scale retaliation.
Hawkish (favoring monetary tightening) remarks by Federal Reserve Chair Kevin Warsh also weighed on stocks. At the Jackson Hole Economic Policy Symposium (Jackson Hole meeting) on the 28th, Warsh said, "We must be confident that underlying inflation is clearly and sufficiently quickly moving toward the target," suggesting rate hikes are possible if inflation does not cool enough.
According to the Chicago Mercantile Exchange (CME) FedWatch, the federal funds rate (FFR) futures market is pricing in a 66.4% chance that the benchmark rate, currently 3.50%–3.75%, will be raised by 0.25 percentage point to 3.75%–4.00% at the Federal Open Market Committee (FOMC) meeting in September.
International oil prices also jumped sharply as Middle East tensions rose again. West Texas Intermediate (WTI) for October delivery settled at $85.76 a barrel, up $2.36 (2.83%) from the previous session. Brent crude closed at $90.49 a barrel, up $2.39 (2.71%).