Nasdaq Composite Tumbles 136 Points as US-Iran Strikes Resume, Oil Surges Past $91; Rate-Hike Odds Hit 62%

Mumbai, Aug 31: The Nasdaq Composite (^IXIC) opened sharply lower on Monday, declining by 136.10 points or 0.52% to trade at 26,266.32, as renewed military hostilities between the United States and Iran sent oil prices surging and reignited inflation fears across global markets. 

The broader sell-off, which began in the opening minutes of trading, saw the Dow Jones Industrial Average (^DJI) shed 351.12 points or 0.66% to 53,208.87, while the S&P 500 (^GSPC) dropped 38.93 points or 0.50% to 7,672.83. The technology-heavy Nasdaq bore the brunt of the decline, with trading volumes reaching 1.67 billion shares in early session activity. 

The market turbulence follows a weekend of escalated military action in the Middle East, marking the first publicly acknowledged US strike on Iranian positions since late July. The US Central Command confirmed that American forces struck two Iranian rocket launchers on Larak Island in the Strait of Hormuz, which were reportedly preparing to deploy sea mines into the critical shipping waterway. 

US Strikes Iranian Launchers Near Strait of Hormuz; Oil, Rate-Hike Bets and Bond Yields Rise 

US forces struck Iranian Revolutionary Guard Corps positions on Larak Island near the Strait of Hormuz on Sunday, marking a renewed escalation between Washington and Tehran. The US Central Command said the strikes targeted Iranian personnel preparing rocket launchers intended to disperse mines into international shipping lanes. The Strait of Hormuz is a critical global energy chokepoint, handling approximately 20% of global oil supplies. 

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Iran retaliated with missile and drone attacks targeting US military positions in the region. Iran’s army claimed responsibility for a drone strike on the UAE’s Al Minhad Air Base, saying areas housing US forces and helicopters were targeted. The UAE said its air force intercepted an Iranian drone approaching its territory, while additional missiles were intercepted over Jordan. 

US Treasury Secretary Scott Bessent said at the G20 finance ministers’ meeting in Asheville, North Carolina, that Washington would maintain pressure on Tehran, stating that the US would continue exerting pressure until the Iranian regime “comes to their senses”. 

The renewed confrontation reverses the relative calm seen since late July and has increased uncertainty across financial markets. 

Brent Crude Rises 5.25% to Above $91 as Hormuz Disruption Risk Grows 

Oil prices jumped as investors assessed the possibility of disruption to shipments through the Strait of Hormuz. Brent crude futures rose 5.25% to above $91 per barrel, while US West Texas Intermediate crude gained 3.37% to $86.21 per barrel. 

The waterway is a major export route for producers including Saudi Arabia, Iraq, Kuwait and the UAE. Any disruption or closure could restrict global energy supplies and push prices higher. 

The oil surge also raises concerns about inflation. Higher fuel costs can increase transportation, manufacturing, electricity and household expenses, potentially slowing recent progress in bringing inflation under control. 

Energy stocks initially benefited from the rise in crude prices. Chevron gained more than 2.5%, while Exxon Mobil rose 1.5%. Halliburton advanced 2.29%, and Valero Energy gained 1.91%. 

Fed Rate-Hike Probability Climbs to 61.9% After Warsh’s Hawkish Remarks 

Markets sharply increased expectations for a September Federal Reserve rate hike. The CME FedWatch tool showed a 61.9% probability of a 25-basis-point hike, compared with roughly 40% a week earlier. 

The shift followed Federal Reserve Chairman Kevin Warsh’s speech at the Jackson Hole Economic Symposium, where he described inflation as “too hot” and said the central bank still had work to do. He also indicated that financial conditions were not broadly restrictive, suggesting monetary policy may need to remain tighter. 

Also Read: How to invest in US stocks 

Warsh’s comments have increased expectations that the Fed could raise rates if inflation fails to move consistently towards its 2% target. Markets are also weighing geopolitical risks, higher energy prices and domestic economic data. 

Chris Larkin, Managing Director of Trading and Investing at E*TRADE from Morgan Stanley, said the Fed chairman appeared focused on the central bank’s inflation-fighting mandate. Barclays economist Jonathan Millar said the hawkish tone made September tightening more likely, while noting that Warsh’s preference for deliberate ambiguity complicates policy signals. Barclays’ baseline also anticipated another hike in December. 

10-Year Treasury Yield Holds at 4.75% as Global Bond Markets Sell Off 

US Treasury yields remained elevated as markets priced in tighter monetary policy and persistent inflation. The 10-year Treasury yield stood at 4.75%, up 3 basis points from Friday, while the 30-year yield was around 5.20%. The two-year yield stood at 4.31%. 

Selling also spread across global government bonds. Japan’s two-year government bond yield reached a 31-year high, while Germany’s two-year Bund yield hit its highest level since July 2024. France’s two-year yield reached its highest since April 2024. 

Since bond prices move inversely to yields, the broad sell-off reflects concerns that inflation may remain elevated for longer. Higher oil prices could reinforce those pressures and encourage central banks to maintain restrictive policies. 

Despite increased Treasury debt repurchases aimed at easing market pressure, longer-term US yields have continued to rise. Persistently high borrowing costs could keep mortgage rates, corporate financing expenses and other interest-sensitive costs elevated. 

CrowdStrike Surges 3.49%, Tesla Gains 3.51% While Shopify Plunges 4.51% in Nasdaq 100 

Within the Nasdaq 100, performance was notably mixed, with cybersecurity firm CrowdStrike (CRWD) emerging as one of the day’s standout performers. The stock surged 3.49% in early trading, reflecting investor interest in security-related plays amid heightened geopolitical tensions. 

Tesla (TSLA) also bucked the broader downward trend, advancing 3.51% to lead gains among the Magnificent Seven mega-cap technology stocks. The electric vehicle manufacturer’s strength appeared to be idiosyncratic, with no specific company news driving the rally. 

Other notable gainers included Qualcomm (QCOM), which rose 1.86%, Texas Instruments (TXN) climbing 1.30%, and Analog Devices (ADI) advancing 1.07%. Micron Technology (MU) added 1.02%, while Nvidia (NVDA) managed a modest 0.93% gain after Friday’s decline. 

However, significant losses were concentrated in consumer discretionary and communication services stocks. Shopify (SHOP) tumbled 4.51%, making it the worst performer among Nasdaq 100 constituents. AppLovin (APP) dropped 3.23%, while Alphabet’s Class A shares (GOOGL) declined 2.34% and Class C shares (GOOG) fell 2.32%. 

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Amazon (AMZN) fell 2.24%, reflecting weakness in the consumer discretionary sector. Other notable decliners included PDD Holdings (PDD) down 2.01%, Airbnb (ABNB) declining 1.94%, and Marvell Technology (MRVL) slipping 1.99% following Friday’s significant losses. 

The semiconductor sector, which had experienced substantial volatility in recent sessions, showed mixed performance. The iShares Semiconductor ETF (SOXX) rose nearly 1% after declining more than 3% in Friday’s session. Nvidia’s modest advance was offset by declines in other chipmakers such as Lam Research (LRCX) down 0.84%, Applied Materials (AMAT) falling 0.77%, and KLA Corporation (KLAC) slipping 0.09%. 

Major Indexes Still on Track for August Gains Despite Monday’s Pullback 

Despite the opening-day weakness, the major US stock indexes remain positioned to close the month of August with positive returns. The Nasdaq Composite has gained approximately 3% month-to-date, while the S&P 500 is up about 2% over the same period. The Dow Jones Industrial Average has advanced more than 1% in August, putting the index on track for its fifth consecutive monthly advance. 

The S&P 500 and Nasdaq Composite are both poised to record their first monthly gains since May, having previously experienced two months of declines. Both the S&P 500 and Dow reached all-time highs earlier in August, reflecting continued investor optimism despite the volatility that has characterised the month. 

The technology sector has been the primary driver of August’s gains, with the S&P 500 tech sector rising nearly 6% during the month. Artificial intelligence-linked stocks have outperformed, with Nvidia climbing more than 7%, Microsoft advancing 9%, and Micron Technology surging 14% over the course of August. 

Also Read: What Are Fractional Shares? 

However, the month has been marked by significant volatility as inflation fears sent Treasury yields to multi-year highs. The resurgence of geopolitical tensions in the Middle East has added another layer of uncertainty to the market outlook as investors prepare for the historically challenging month of September. 

Since 1990, the CBOE Volatility Index (^VIX) has tended to climb from median levels of approximately 16.5 in late August toward 18 by mid-September, reaching roughly 19 in early October. The VIX, which measures the 30-day volatility implied by S&P 500 options, fell to 14.13 on Friday, its lowest level of 2026. However, Monday’s trading saw the VIX rise 5.89% to 15.28, reflecting increased market anxiety. 

Apple CEO Tim Cook Retires After 15 Years; John Ternus Takes Helm Ahead of September Event 

In a significant corporate development, Monday marks Tim Cook’s final day as Chief Executive Officer of Apple (AAPL), concluding a 15-year tenure that saw the technology giant’s market capitalisation expand dramatically. Cook, who took over from Steve Jobs on August 24, 2011, will transition to the role of Executive Chairman of Apple’s board and will continue to engage with policymakers globally. 

Under Cook’s leadership, Apple stock has gained nearly 2,300%, driven by the continued popularity of iPhones and the successful expansion of the company’s services segment to more than $100 billion in annual revenue. During his tenure, Apple launched several new product categories including the Apple Watch, AirPods, and the Vision Pro mixed-reality headset. 

John Ternus, Apple’s senior vice president of hardware engineering, assumes the CEO role effective Tuesday. Ternus has been with Apple for over two decades and has been instrumental in the development of key hardware products including the MacBook Neo and recent iPhone iterations. 

Ternus’s first major test will come at Apple’s annual product event scheduled for September 9, where the company is expected to announce updates to its iPhone lineup. Analysts anticipate that the event could feature the company’s first foldable iPhone, as well as potential price increases across the range to offset rising memory costs. 

Apple shares were little changed in Monday’s trading, having gained approximately 17% since the start of the year. The stock has pulled back from a record high set in late July following a disappointing revenue forecast. 

August Jobs Report Looms as Key Market Catalyst; Economists Expect 65,000 Payroll Gain 

With the second-quarter earnings season largely concluded following Nvidia’s blockbuster report, investor attention is turning toward the macroeconomic data scheduled for release this week. The August jobs report, due Friday, is expected to be the week’s most significant market event, providing crucial insight into the health of the US labour market and its implications for Federal Reserve policy. 

Economists surveyed by FactSet anticipate a net gain of 65,000 nonfarm payroll jobs in August, including 45,000 in the private sector. The unemployment rate is projected to tick up to 4.2% from 4.1% in July. The August labour market data comes after July’s report surprised economists with a loss of 23,000 jobs, while June’s figures were revised downward. 

Also Read: What Is the S&P 500? A Simple Guide for Everyday Investors 

The labour market outlook carries particular significance given Federal Reserve Chairman Kevin Warsh’s hawkish Jackson Hole address. Strong employment data could reinforce expectations for continued monetary tightening, while weaker-than-expected numbers might prompt investors to reassess the likelihood of further rate increases. 

The jobs report will be preceded by several other economic indicators this week. Tuesday brings the Job Openings and Labor Turnover Survey (JOLTS) for July, along with August’s manufacturing PMI data. Wednesday features the ADP national employment report for August and factory orders data. Thursday’s calendar includes initial jobless claims and the services PMI. 

Friday’s employment report, combined with the August Consumer Price Index data scheduled for the following week, will provide crucial inputs for Federal Reserve policymakers as they prepare for the September meeting. The dual mandate of price stability and maximum employment remains central to the Fed’s decision-making process. 

The Nasdaq Composite’s 136-point decline reflects mounting pressures from geopolitical instability, surging oil prices, and increased expectations of Federal Reserve rate hikes. The August jobs report and upcoming earnings from Broadcom, Dell, and Palo Alto Networks will provide crucial data points for assessing economic health. Treasury yields near 4.75% and the VIX’s rise to 15.28 indicate heightened market sensitivity to negative news, with September historically presenting a challenging environment for equities. 

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