Financial Markets                      09/08 15:25

   

   NEW YORK (AP) -- U.S. stocks fell Tuesday in their return to trading from a 
three-day weekend after the latest fighting in the war with Iran pushed oil 
prices higher.

   The S&P 500 sank 0.6%. The Dow Jones Industrial Average dropped 628 points, 
or 1.2%, and the Nasdaq composite dipped 0.3%.

   They felt pressure from rising oil prices after a barrel of Brent crude 
briefly climbed as high as $99.46. It later settled at $97.92, up 0.9%, to 
continue its run from roughly $72 in early July as increased fighting in the 
Middle East keeps the global flow of oil constricted.

   More expensive oil has worsened worries about the high inflation weighing on 
people and companies across the country, which gives extra heft to a couple 
reports coming later this week. On Thursday, the U.S. government will release 
its August report for inflation at the wholesale level, which economists expect 
will show an acceleration to 5.4% from 4.7% in July.

   The more closely watched report on inflation that U.S. consumers are feeling 
will arrive on Friday. That update will show how much more people are paying 
for groceries, clothes and other costs of living than a year earlier, and 
economists expect it eased a bit to 3.3% from July's 3.4% inflation rate. That, 
though, remains well above the 2% target that the Federal Reserve has set as 
its goal.

   This week's updates on inflation will be the last before the Fed meets next 
week to decide whether to cut, raise or hold interest rates steady. The 
traditional move for the Fed when inflation is high is to raise its main 
interest rate. That in turn would filter out into the rest of the bond market, 
make it more expensive for companies and people to borrow, slow the overall 
economy, undercut prices for investments and hopefully rein in inflation.

   But President Donald Trump has been lobbying for lower interest rates 
instead, which could give the economy -- and inflation -- an extra kick. The 
Fed's new chairman, Kevin Warsh, has meanwhile said he wants to give financial 
markets fewer clues about what the Fed plans to do with interest rates in the 
short term.

   That all has traders betting on a nearly 60% probability the Fed will raise 
its federal funds rate at the conclusion of its next meeting on Sept. 16, 
according to data from CME Group.

   In the bond market, the yield on the 10-year Treasury rose to 4.79% from 
4.78% and is near its highest level since the autumn of 2023.

   Higher Treasury yields put more pressure on companies to grow their profits 
in order to lift their stock prices.

   On Wall Street, Boston Scientific fell 5.9% after saying that a network 
outage earlier this summer caused by a cybersecurity incident means it's 
unlikely to meet forecasts for sales and profit for the third quarter and for 
the fully year of 2026. It expects to make back some of the revenue as it 
continues to ramp operations globally, fulfill customer orders and reduce 
remaining backlogs, but it doesn't yet know the full impacts.

   Shares of Novartis that trade in the United States tumbled 13.9% after the 
Swiss pharmaceutical company gave a discouraging update on a study of a therapy 
for people living with myotonic dystrophy type 1, a neuromuscular disease.

   Qualcomm helped limit the market's losses after rising 3.2%. It announced a 
deal to collaborate with Amazon on large-scale AI data centers. The deal also 
gives Amazon the right to acquire up to 25 million of Qualcomm's shares at 
$161.26 per share.

   In stock markets abroad, Japan's Nikkei 225 sank 1.7% under the weight of 
losses for major exporters, which were hurt by the continued rise for the 
Japanese yen against the U.S. dollar.

   A stronger yen erodes the value of sales made in U.S. dollars when Toyota 
Motor, Panasonic Holdings and other exporters translate them back into the 
Japanese currency. The Bank of Japan is also scheduled to meet next week on 
interest rates, and speculation is climbing that it could raise interest rates, 
which could further strengthen the yen.

   In China, indexes fell 0.4% in Hong Kong and rose 0.2% in Shanghai after the 
world's second-largest economy said its exports jumped 25% year-on-year in 
August, driven by strong demand for autos and high tech items.

   ___

   AP Business Writers Matt Ott, Elaine Kurtenbach, Chan Ho-him and Yuri 
Kageyama contributed to this report.

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