Investing.com -- U.S. stocks fell sharply Tuesday amid fears of a sharp escalation of tensions in the Middle East, handing back some of the previous month's gains ahead of a raft of important economic data.
By 09:50 ET (13:50 GMT), the Dow Jones Industrial Average was down 250 points, or 0.6%, S&P 500 traded 40 points, or 0.7%, lower, while NASDAQ Composite dropped 170 points, or 1%.
All three of the main averages on Wall Street advanced in both September and the third quarter, the first positive September for the S&P 500 since 2019.
The S&P 500 is now up more than 20% this year - the first time since 1997 that the benchmark index has risen 20% or more through the first nine months of the year.
Iran to launch strike on Israel?
Axios reported earlier Tuesday that Iran was prepping a ballistic missile attack against Israel, a move that risks escalating a conflict in the oil-rich Middle East that threatens to suck in the major regional powers as well as the U.S..
This follows Israeli troops beginning "limited" raids against Hezbollah targets in the border area of Lebanon.
By 09:50 ET, the Brent contract climbed 2.8% to $73.71 per barrel, while U.S. crude futures (WTI) traded 2.6% higher at $69.94 per barrel.
Elsewhere, the American Petroleum Institute industry group is set to reveal its weekly estimate of US crude oil and fuel stockpiles in the week to Sept. 27.
Powell reins in major cut expectations
The new month had already started with Wall Street on the back foot after Fed chief Jerome Powell reined in expectations of another hefty rate cut this month, saying the committee doesn't feel "like it’s in a hurry to cut rates quickly" and that the process of lowering the fed funds rate will "play out over time."
Goldman Sachs (NYSE:GS) strategists said they see Powell’s remarks “as consistent with our forecast for 25bp cuts in November and December.”
“We continue to see the choice between 25bp and 50bp in November as a close call,” they added.
The Fed began its policy shift last month with a 50bp rate cut, marking the first reduction since 2020.
Heavy economic data slate
There is more US economic data to study as investors look for more clues over how the Fed approaches more potential rate cuts this year.
The closely-monitored Job Openings and Labor Turnover Survey, or JOLTS report, is expected to show that there were 7.640 million available roles in August.
Investors will also be scrutinizing the September reading of the Institute for Supply Management's manufacturing and services purchasing managers' indices this week for further signals on the momentum of the American economy.
The week ends with the release of the October nonfarm payrolls report on Friday, with economists expecting the US economy to have added 144,000 jobs.
CVS Health mulls options
On the corporate front, CVS Health (NYSE:CVS) stock fell 1.7% after Reuters reported the company is reportedly mulling options that would include the company breaking up its retail and insurance divisions.
Citing people familiar with the matter, the news agency said CVS Health has been discussing several options, including the process of a split, with its financial advisors in recent weeks.