Stocks Set New Records, Israeli Attack Raises Oil Prices

Leading stock indices continued to rise, but due to new geopolitical tensions, oil prices are also increasing. On Wall Street, all major indices reached new record levels on Tuesday as it becomes increasingly certain that the U.S. central bank will lower interest rates next week due to weakness in the labor market. Dow Jones strengthened by 0.43 percent to 45,711 points, while S&P 500 rose by 0.27 percent to 6,512 points, and Nasdaq index increased by 0.37 percent to 21,879 points.

All three indices reached new record levels as investors believe that Fed leaders will lower interest rates by 0.25 percentage points at the meeting in mid-September. Revised employment data released yesterday showed that approximately 900,000 fewer people were employed in the last 12 months than initially reported.

This indicates that the labor market is weaker than previously thought and that the Fed should take action to accelerate economic growth. In the coming days, investor focus will be on reports regarding consumer and producer prices, which will show how inflation moved in August and how much room the Fed has for reducing the cost of money.

Inflation could receive additional fuel from rising crude oil prices. Oil prices rose on Tuesday in international markets above $67 as news of the Israeli airstrike on Palestinian officials in Qatar sparked concerns about supply disruptions from the Middle East. At the beginning of the week, market attention was drawn to the announced change in supply from the group of member countries of the Organization of the Petroleum Exporting Countries (OPEC) and its allies.

The group of eight OPEC+ members decided at a Sunday online meeting to release only an additional 137,000 barrels per day to the market in October, approximately four times less than in the summer months. Price support was provided by speculation that the ‘group of eight’ would likely send about half as many barrels to the market, along with increased Chinese procurement.

Chinese stockpiling has absorbed the excess production this year, and it is likely to continue with a similar dynamic into 2026, estimates the chief analyst at the commodity trading company Gunvor.