Indices Fall as Iran Fires Missiles at Israel; Defense supplies are being increased

The number of job openings in the US recovers in August
Port strike paralyzes half of shipping
Indices in the red: Dow 0.2%, S&P 500 0.8%, Nasdaq 1.3%

NEW YORK, Oct 1 (Reuters) – U.S. stocks fell on Tuesday, with the Nasdaq losing more than 1%, as investors became more cautious after Iran fired missiles at Israel.

Iran fired the volley of ballistic missiles in retaliation for Israel's campaign against Tehran's ally Hezbollah. In response, US President Joe Biden directed the US military to support Israel's defense and shoot down missiles aimed at Israel, the White House National Security Council said.

While the overall market fell, energy company stocks rose along with oil prices. Exxon Mobil (XOM.N)opens new tab rose by 2.2%.

Defense stocks also rose, including Northrop Grumman (NOC.N).opens new tab and Lockheed Martin (LMT.N)opens new tab. The S&P 500 Aerospace and Defense Index (.SPLRCAERO)opens new tab rose more than 1% to a record high. Utilities (.SPLRCU)opens new tab rose by 0.7%.

Airline stocks fell, including Delta Air Lines (DAL.N)opens new tabwhich corresponds to a decrease of 1%.

“This underlines the situation of this market in the fact that there are a variety of risks, be it the decline in employment in the US, the geopolitical tensions in Ukraine or the Middle East,” said Walter Todd, chief investment officer at Greenwood Capital in Greenwood, South Carolina.

“And the market appears to have completely mispriced the flare-up of these risks. … He’s vulnerable to shocks like this.”

On Monday, the three major U.S. indexes posted strong gains for September and quarter.

Federal Reserve Chairman Jerome Powell's interest rate announcement at the New York Stock Exchange (NYSE) in New York City

The Dow Jones Industrial Average (.DJI)opens new tab fell 83.68 points or 0.2% to 42,246.47. The S&P 500 (.SPX)opens new tab lost 43.34 points or 0.75% to 5,719.14 and the Nasdaq Composite (.IXIC)opens new tab fell 244.42 points or 1.34% to 17,944.75.

CBOE's Market Volatility Index, Wall Street's fear indicator, (.VIX)opens new tab rose 2 points to 18.74, after hitting a three-week high of 20.73 earlier in the session.

Data released early Tuesday showed U.S. job vacancies increased again in August, while the Institute for Management Supply (ISM) report showed manufacturing activity was at 47.2 in September, versus estimates of 47 ,5.

Investors were also cautious ahead of U.S. jobless claims data on Thursday and monthly payrolls data on Friday.

Traders are calculating a 62.2% chance that the Federal Reserve will cut interest rates by 25 basis points at its November meeting, CME Group's FedWatch tool showed. Bets for a larger 50 basis point cut are at 37.8%.

Investors were also keeping an eye on a port strike on the East Coast and Gulf Coast that brought traffic to about half of the country's maritime shipping to a halt.

The strike, which began Tuesday, is not expected to cause global supply problems as deep or severe as those experienced during the COVID-19 pandemic, but it still creates more economic uncertainty that has been raised by policymakers Fed needs to be assessed.

Declining issues outnumbered advancing ones on the NYSE by a ratio of 1.36 to 1; On the Nasdaq, a ratio of 2.53 to 1 favored the decliners.

The S&P 500 posted 51 new 52-week highs and two new lows; The Nasdaq Composite recorded 60 new highs and 118 new lows.

Additional reporting by Johann M. Cherian and Purvi Agarwal in Bengaluru and Lewis Krauskopf in New York; Edited by Maju Samuel and Richard Chang

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