Explained - Why the Dow Jones fell over 600 points on Tuesday but S&P 500 and Nasdaq did not

Benchmark indices on Wall Street began the truncated week on a negative note on Tuesday, September 8, as rising tensions in West Asia led to a spurt in crude oil prices.

The Dow Jones fell over 600 points on Tuesday, digesting cues from over the weekend as well as from Monday, when the markets were shut due to the Labor Day holiday. However, the losses on the S&P 500 and the Nasdaq were not as steep as the Dow, with the tech-heavy Nasdaq falling only 0.3%, while the S&P 500 ended with losses of 0.6%.

Why Did S&P 500 And Nasdaq Not Fall As Much As The Dow Jones?

Significant buying was seen in the AI-infrastructure linked stocks on Tuesday, including Intel, AMD, Qualcomm and Broadcom, which kept the losses on the S&P 500 and Nasdaq in check.

Shares of Intel were up 9% on Tuesday, while those of AMD, Broadcom and Qualcomm rose 5.5% and 3% each respectively.

Shares of Corning, a glassmaker, whose fiber-optic technology is becoming a key component of the AI Data Centers, jumped another 8% on Tuesday, after signing a multi-billion Dollar partnership with Verizon to build fiber-optic cables for AI connectivity. The stock has now gained 90% so far this year.

Similarly, Qualcomm shares rose over 3% after announcing that it has issued warrants to Amazon.com Inc., allowing the company to acquire shares worth up to $4 billion. The move is part of a deal between the two companies, wherein Amazon Web Services will buy up to $60 billion worth of Qualcomm's server chips and other technology.

West Asia Tensions Unnerve Investors On Wall Street

A major reason behind the fall on Wall Street were the escalating tensions in West Asia and the subsequent impact on crude oil prices.

The US Central Command, in the early hours of Wednesday, Indian Time, wrote on "X" that it has destroyed five Iranian oil tankers, in response to the IRGC attacks on a US warship, which was successfully intercepted.

The IRGC has issued a warning to shipping crews in Bahraini and Kuwaiti waters to abandon their fleet as they could now be under attack.

Brent Crude prices topped $99 a barrel on Tuesday, with prices also rising after the Houthis claimed more attacks on Saudi Aramco's key facilities in the Southern part of the country. Although Saudi's Energy Ministry confirmed the attacks, it did not specify the location or the extent of the damage, barring the fact that 73 people have been injured.

US-Canada Tensions Rise

Another reason behind the sell-off on Wall Street is the rising trade tensions between the US and Canada.

On Tuesday, Canada's retaliatory tariffs on goods worth CA$27.6 billion took effect with duties ranging from 15% to 50% on products like dairy, agri equipment, paper, household appliances and electronics. The tariffs on US Steel, Aluminium and Iron Products has also doubled to 50%.

The move prompted US President Donald Trump to issue another threat on his Truth Social that he would seek to ban Canadian companies from selling to Government contractors unless Canada restores full and fair reciprocity for American Farmers and Companies.

All eyes are now on the wholesale and retail inflation figures for August, that will be reported on Thursday and Friday respectively. These will be the last major macro data points reported before the Federal Reserve meets next week to decide on its interest rate decision. Currently, the Fed Fund futures are pricing in a 60% probability of a 25 basis points rate hike next week, according to the CME FedWatch tool.