Bond Yields Make for a Not So Nice Start to September: 8 Key Items Shaping the Stock Market Tuesday

These are the early headlines and other items poised to influence the market at the start of trading Tuesday. As we share this collection of market drivers, U.S. equity futures point to a lower market open.

1. Global bond yields hit major new highs on Tuesday as renewed fighting in the Middle East lifted oil prices and traders braced for interest rate ‌hikes, putting pressure on stock markets around the world… The 10-year U.S. Treasury yield, a benchmark for prices across asset classes, rose to 4.79% — its highest since early 2025. (Reuters) Two oil supertankers attempting to exit the Strait of Hormuz were struck late Monday by projectiles in quick succession, maritime security consultant Marisks said, the latest sign of renewed hostilities around the critical waterway… Crude prices jumped on Tuesday after US forces hit an island in Hormuz, and Iran retaliated with attacks on the United Arab Emirates and Jordan — marking the first exchange of fire in about a month. (Bloomberg)

Renewed tensions in the Middle East and higher oil prices are affecting inflation expectations, pushing bond yields higher and that is likely to trigger some selling as investors look to lock in existing gains. How orderly that selling is if it becomes a panic-driven event will determine the degree to which compelling opportunities in the market emerge.

With the S&P 500 closing below its 20-day moving average last night (7716.68), the next layer of support is the 50-day moving average (7567.50), 1.5% below last night’s market close. After that, the 100-day will be the next line of support to watch, and at 7441.57, it’s ~3.2% below where the S&P 500 finished August.

2. The downward path of input price inflation continued in August. Input costs rose at the softest rate in six months, although the rate of increase was still well above that seen before the outbreak of the Middle East war. This also held true for output charges. (S&P Global)

Those August Manufacturing PMI inflation findings from S&P Global were for the Eurozone and ones for the U.K. pointed to purchase price and supply chain pressures easing in August. At 9:45 AM ET, S&P Global will publish its August Manufacturing PMI data for the U.S. and that will be quickly followed at 10 AM ET by the analogous report from ISM.

The Manufacturing Price sub-index from ISM has been on a downward slope these few months, but following comments last week from Fed Chair Warsh, it will take a large drop compared to the 71.1 figure for July to jostle the market from expecting a rate hike later this month. But we’ll also need to see a meaningful decline in ISM’s August Service Price component for any such re-thinking to stick.

Should oil and related prices continue to move higher between now and the Fed’s next policy decision on September 16, odds are the market will look through this week’s PMI price data and next week’s August CPI and PPI reports.

3. A tropical storm warning and hurricane watch were in effect Tuesday morning as Tropical Storm Edouard strengthened and made its way toward the U.S. Gulf Coast. The National Hurricane Center said the storm could bring near-hurricane conditions to parts of Texas and Louisiana later in the day. (CBS News) Motiva and Exxon have not reduced production at their Port Arthur and Beaumont, Texas refineries, respectively, but they have secured loose items and equipment that can be blown by high winds or drift in flood waters should those be produced by the developing storm expected to make landfall on Tuesday, the sources said. (Reuters)

So far, Edouard doesn’t seem to be a disruption to oil production in the U.S. Gulf Coast, but given the propensity for these storms to increase in intensity, we will want to track its progress. Should near-term disruptions from Edouard or other storms as we move into what is statistically the worst and most active month for Atlantic hurricanes come about, we could have yet another added tailwind to oil and gas prices.

4. The agreement with the U.S. involves the development of 17 strategic oil fields in Venezuela that hold proven reserves of 65 billion barrels of oil, Venezuelan state media reported on Saturday. Although tapping the crude could eventually lead to more oil flowing to the U.S., new fields can take 15 years after discovery to begin producing oil, according to Global Energy Monitor, a nonprofit that tracks energy infrastructure. (CBS News)

When President Trump concludes his meeting with oil executives today, we expect to see some bombastic headlines, but in our view, what will matter more will will be the announced timetable measured against the 15-year figure from Global Energy Monitor.

5. Apple Inc.’s Tim Cook handed over the reins to John Ternus on Tuesday, capping a tenure as chief executive officer that cemented the company as an iconic global brand and turned its stock into one of the most reliable bets. (Bloomberg)

There is a new sheriff in Cupertino, and we are already starting to see some management shake-ups. Whether Ternus is viewed as being a product or operations person, the degree to which he can deliver a compelling Apple (AAPL) message and where his presentation skills land on the spectrum between Steve Jobs and Tim Cook will be influenced by his coming out party next week.

We’re referring to Apple’s September 9 event that is expected to showcase its new iPhone Pro lineup and introduce the company’s first foldable iPhone. Our hope is that Ternus abandons the canned event format that developed under Cook, and brings back the live presentation that was a hallmark of the Jobs era.

Presentation and the market’s first read on Ternus aside, we’ll be looking to see the goods Apple is delivering, especially when its comes to the revamped Apple Intelligence and AI-enabled Siri. The price points compared to recent hardware models will be another item to watch.

6. The House is back in session Monday for the first time in five weeks. It’s not clear how long members will stick around. Speaker Mike Johnson is hoping to tick the lone essential item off the chamber’s to-do list in lawmakers’ first days back: sending a shutdown-averting spending bill to President Donald Trump’s desk. Otherwise, the Capitol Hill agenda is devoid of must-pass legislation until later in the year. (Politico)

Coming into September we already have several items that are going to influence the market. We will need to see if a potential government shutdown is added to the list. Given what is expected to be very contentious mid-term elections, we would not rule out any political gamesmanship. Hopefully, we are wrong about this.

7. Economic data today per TipRanks: S&P Manufacturing PMI (August), ISM Manufacturing PMI (August), Construction Spending (July), JOTS Job Openings & Quits (July).

8. Companies reporting today per TipRanks: AM – Medtronic (MDT), Nio (NIO). PM – Credo Technology (CRDO), Dell (DELL), MongoDB (MDB), Palo Alto Networks (PANW).

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At the time of publication, TheStreet Pro Portfolio was long AAPL.