Middle East Developments Keep Stock Market Low
The stock market indices closed low on Tuesday, with the Dow Jones falling by 173 points, or 0.41%, after worrisome news continued to pour out of the Middle East.
A recent successful assassination attempt on the life of a Hezbollah leader by Israeli forces has renewed heightened tensions and severe fighting across the Middle East. Iran has not promised to retaliate for the attack, as that country supports the political military group Hezbollah.
These events have caused investors in the US stock markets to pull out and drive the stock values down. The S&P 500 fell 0.93% as the market closed on Tuesday, and the Nasdaq Composite was hit the hardest with a 1.53% drop.
What was shaping up to be a strong quarter has suddenly dipped. September started off slow for the stock market, and it is historically a tough month for most markets. But the Fed’s interest rate cut spurred market growth and frenzied investing up until the recent weekend when Middle East fighting escalated.
What Investors Have to Look Forward To
If Iran decides to escalate the fighting further, then the stock market will likely take a further dip. However, investors should look out for another interest rate cut, which could encourage market growth and put the stock market back on good footing.
Middle East fighting is most likely to affect crude oil prices, and those rates increased by 2% on Tuesday. But the stock market will feel the effect, as further fighting means fewer assets will be available for trading. If more countries commit to join the fight and commit people and resources to help out, that leaves less of the financial pie for the stock market to enjoy. Consumers may tighten their belts in anticipation of extended fighting.
Investors have the winter months to look forward to, which is generally a time where the gas and oil markets do well as demand increases. It is also a time where consumers are more likely to spend, increasing cash flow into the stock market and revenue for companies listed on the stock indices. That holiday spending quarter may be enough to counter the increased selling pressure placed on the market by events in the Middle East.
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