Stocks Slide as Oil Climbs Above $93 and Middle East Tensions Escalate

The major averages finished broadly lower on Tuesday as rising crude oil prices and renewed geopolitical tensions created a difficult backdrop for equities at the start of the holiday-shortened week. The S&P 500 declined 0.6%, the Nasdaq Composite slipped 0.3%, and the Dow Jones Industrial Average fell 1.2%, with pronounced health care weakness contributing to the blue-chip index’s underperformance. The Russell 2000 lost 0.5%, while the S&P MidCap 400 declined 0.7%.

Crude oil remained one of the market’s dominant influences, settling $1.52 higher, or 1.7%, at $93.02 per barrel. The advance followed another escalation in Middle East hostilities, including renewed exchanges between U.S. and Iranian forces and Houthi attacks on Saudi energy infrastructure. Recent attacks have included U.S. strikes against Iranian oil tankers after attempted Iranian attacks on U.S. naval vessels, while Houthi missile and drone strikes have targeted Saudi cities and energy facilities.

Energy stocks benefited from the renewed rise in crude, with the sector gaining 1.0%. Utilities (+0.9%) were the only other S&P 500 sector to finish higher, highlighting the defensive tone that characterized much of Tuesday’s trading.

Geopolitical concerns remained elevated into the afternoon. Reports indicated additional U.S. strikes against Iranian oil tankers as explosions were reported near Kharg Island, Iran’s primary oil-export hub, while Iran continued threatening retaliation and further restrictions around the Strait of Hormuz. The renewed escalation has heightened concerns about regional energy flows and the security of one of the world’s most important oil-shipping corridors.

Health care (-2.6%) finished at the bottom of the sector standings and was a major source of pressure on the Dow. Amgen (AMGN 393.17, -44.06, -10.08%) ranked among the day’s weakest S&P 500 components after clinical-trial setbacks at Novartis (NVS 137.70, -22.29, -13.93%) weighed on related names. Biotechnology stocks also came under considerable pressure, and Amgen’s sharp decline had an outsized impact on the Dow’s performance.

Financials (-1.4%) were another notable laggard, with broadly lower trading across the sector adding to the market’s underlying weakness.

Several areas sensitive to both interest rates and energy costs also struggled. The iShares U.S. Home Construction ETF fell 3.1%, reflecting continued pressure on housing-related stocks amid an unfavorable combination of elevated borrowing costs and persistent macro uncertainty.

Information technology (-0.2%) held up considerably better than the broader market, thanks largely to continued strength in semiconductor stocks. The PHLX Semiconductor Index gained 1.3%, helping offset a 1.8% decline in the iShares GS Software ETF as well as weakness in NVIDIA (NVDA 225.73, -4.63, -2.01%) and several other mega-cap names.

Company-specific catalysts helped drive the semiconductor group’s relative strength. Intel (INTC 104.47, +8.67, +9.05%) rallied following favorable analyst commentary and reports of potential price increases. Advanced Micro Devices (AMD 505.74, +28.17, +5.90%) climbed nearly 6% after upbeat commentary regarding accelerating AI demand and the company’s server CPU opportunity.

Qualcomm (QCOM 174.09, +5.35, +3.17%) also advanced after highlighting a multi-year agreement with Amazon (AMZN 256.97, -1.54, -0.60%) covering custom silicon and optical-connectivity solutions. Management characterized the agreement as significant validation for Qualcomm’s expanding data-center business.

Optical-networking stocks represented another pocket of notable strength. Verizon (VZ 50.41, +0.27, +0.54%) and Corning (GLW 165.99, +11.69, +7.58%) announced a multibillion-dollar agreement covering more than 80 million miles of high-density optical fiber and connectivity solutions between 2027 and 2032.

The agreement provided a favorable read-through for the broader optical-infrastructure market. Lumentum (LITE 978.54, +97.28, +11.04%) surged 11.0%, while Coherent (COHR 301.88, +20.02, +7.10%) gained 7.1% as investors continued to position around rising demand for data-center and AI-related networking infrastructure.

Tuesday’s decline ultimately reflected broad weakness beneath the surface, with nine of the 11 S&P 500 sectors finishing lower. Rising oil prices and renewed geopolitical tensions remained important headwinds, while steep losses in health care and financials added to the pressure.

Semiconductor and optical-infrastructure strength provided a meaningful counterweight and helped limit the Nasdaq Composite’s decline, but the overall tone remained cautious. With crude holding above $93 per barrel and geopolitical risks still elevated, investors are now turning their attention back to inflation and monetary policy.

The August Producer Price Index on Thursday and Consumer Price Index on Friday will be the next major catalysts. Both reports could materially influence expectations for next week’s FOMC meeting, particularly after the stronger August Employment Report pushed markets toward a more hawkish assessment of the Federal Reserve’s next policy move.

Our FTinvest 11 model portfolio declined 0.26% to close at 997.54, slipping back below the 1,000 level after narrowly reclaiming it in the previous session. The portfolio remains approximately 9.0% below its all-time closing high of 1,096.33, leaving it close to, but still outside, the 10% correction threshold.

FTinvest 11 is now up approximately +7.47% year-to-date, preserving a positive return for 2026 despite the substantial retreat from July’s record high. Recent trading around the 1,000 level continues to reflect a period of consolidation and heightened volatility, with neither the recent rebounds nor declines establishing sustained momentum. FTInvest 11 remains focused on its disciplined, value-driven approach to long-term capital appreciation while navigating the current period of weakness.