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The Dow Jones Industrial Average fell more than 300 points on Tuesday morning after the Federal Reserve signaled that future interest rate cuts would be less aggressive. Fed Chair Jerome Powell's comments on Monday came less than two weeks after the Federal Open Market Committee approved a half percentage point (50 basis points) cut. This was the first cut after years of interest rate hikes to combat inflation following the pandemic. Additionally, oil prices rose 3% on Tuesday morning as Iran planned an attack on Israel.

Powell expressed optimism about the labor market on Monday, noting that layoffs remain low. He highlighted that the labor force participation of people aged 25 to 54 is near historic highs, while the labor force participation of prime-age women continues to reach new all-time records. Powell also expressed optimism about controlling inflation, pointing to recent data that suggests steady progress toward the Fed's 2% annual inflation target.

With the economy in solid shape, Powell hinted at the possibility of further rate cuts – but stressed that the latest half-percentage point cut should not be seen as a signal that future cuts will be equally aggressive.

And on Tuesday, thousands of longshoremen on the East and Gulf Coasts officially went on strike after negotiations between their union and a coalition of employers failed. The strike is likely to have far-reaching consequences for the entire US economy. Nearly every industry relies on major ports on the East and Gulf Coasts to deliver daily shipments of equipment, food and supplies. According to Miter Corporation, ports and facilities that handle about 51% of the country's total port capacity are affected by the strikes.

In the afternoon, the Dow fell 140 points, or 0.3%, to 42,192. Meanwhile, the S&P 500 and Nasdaq fell 0.9% and 1.6%, respectively.

Oil prices are rising and shipping stocks are falling

As tensions escalate in the Middle East and Iran prepares to attack Israel, oil prices rose 3%. West Texas Intermediate rose 3% to $70.22 a barrel, while Brent rose 2.72% to $73.65 a barrel.

Additionally, shipping stocks fell on Tuesday morning, with shares of Zim (ZIM), Maersk (AMKBY) and Golden Ocean Group (GOGL) falling 6.3%, 6% and 2%, respectively.

Tech stocks are also in the red

Among tech giants, shares of Apple (AAPL) and HP (HPQ) fell 4% and 2.7%, respectively, while Dell Technologies (DELL) fell 2.9%.

Shares of Amentum Holdings (AMTM), a global technology and engineering services partner that supports key defense and security programs of national importance, fell more than 14% on Tuesday morning. The company recently named Stephen A. Arnette as chief operating officer and was also recently added to the S&P 500.

— William Gavin contributed to this article.

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