US Open: Wall Street Starts September Under Pressure as Oil Returns to the Spotlight

The start of September brings a more cautious mood to Wall Street. Major U.S. indices are opening lower, with renewed tensions between the United States and Iran weighing on sentiment. Following the resumption of hostilities, markets are once again pricing in risks related to the situation in the Persian Gulf, quickly pushing oil prices higher. Brent crude has once again moved above $90 per barrel, while WTI is approaching the $90 mark.

The rise in oil prices is particularly important for Wall Street as concerns about inflationary pressures are returning. A prolonged period of higher oil prices could complicate the Federal Reserve’s outlook and limit room for monetary policy easing. Uncertainty surrounding the security of oil shipments through the Strait of Hormuz is also directly affecting stock valuations, particularly among companies most sensitive to energy prices and the broader economic outlook.

Today’s economic data also point to a somewhat mixed picture. The ISM Manufacturing Index fell to 54.6 in August from 55.6 a month earlier, coming in below expectations of 55.2. The reading remains above the 50-point threshold, indicating that the manufacturing sector is still expanding, although the weaker reading may suggest some moderation in activity. Combined with earlier signals from the labor market, the data indicate that the U.S. economy remains resilient, but its growth rate may gradually be slowing.

The earnings calendar is also worth watching. The earnings season has largely come to an end, leaving the market with fewer fresh catalysts from major U.S. companies that could improve sentiment. Results from companies such as Broadcom and Micron will attract attention again in the coming weeks, but those releases are still some time away. Until then, macroeconomic data, expectations for the Fed and, above all, developments in the Middle East are likely to play a greater role in driving markets.

For now, the start of the new month is not bringing a continuation of the strong sentiment seen at the end of August. Markets are once again facing questions over how long elevated geopolitical risks will persist and whether higher oil prices could become another challenge for the U.S. economy. Although the situation remains highly dynamic, Wall Street is clearly showing today that renewed tensions in the Persian Gulf continue to have a direct impact on asset valuations.

Source: XTB Research

S&P 500 futures (US500) are trading lower today as tensions around the Strait of Hormuz escalate and oil prices rise. Higher energy costs are increasing concerns about inflationary pressures and could raise expectations for a more restrictive Fed policy, weighing further on U.S. equity valuations.

Source: xStation5

Corporate News

GoPro (GPRO.US) shares are surging today after popular YouTube creator Markiplier became the company’s largest individual shareholder. Investors are responding positively to his involvement, expecting it to increase the brand’s visibility and improve GoPro’s business prospects.

Duolingo (DUOL.US) shares are rising following an upgrade. Analysts believe the threat from ChatGPT is less significant than previously expected, while continued user growth and product improvements support the company’s long-term prospects.

Micron (MU.US) shares are down around 2% amid concerns over a potential strike by employees in Taiwan. The company is offering its highest-ever incentive payments to Taiwan-based employees in an effort to ease tensions with labor unions.

NIO (NIO.US) shares are declining following the release of second-quarter results, as the company’s revenue comes in below market expectations. Margins and vehicle deliveries remain positive, while NIO’s guidance points to further delivery growth in the third quarter.

Medtronic (MDT.US) shares are gaining around 3% after the company raised its full-year organic revenue growth forecast. The company points to strong demand for medical devices used in cardiovascular procedures as one of the key drivers of growth.