Stocks retreated Tuesday as growing tensions in the Middle East poured water on investor enthusiasm coming off a strong quarter.

The Dow Jones Industrial Average fell 173.18 points, or 0.41%, to 42,156.97. The S&P 500 pulled back 0.93% to 5,708.75, while the Nasdaq Composite lost 1.53% to finish at 17,910.36.

West Texas Intermediate crude oil spiked after the Israel Defense Forces said Iran was firing missiles at the country. The CBOE Volatility Index (VIX), also known as Wall Street's fear gauge, topped 20 at its high of the day, underscoring the rising concern among traders.

But oil settled off its session highs and stocks moved off their lows after the Iran attack as traders hoped damage and subsequent Israel retaliation would be minimal.

"The fear of contagion is always destabilizing," said Keith Buchanan, senior portfolio manager at Globalt Investments. "Aside from, of course, the paramount impact on lives, the markets take a direct hit when there are forces that are almost promising some level of destabilization."

More than 3 out of every 5 S&P 500 stocks were lower in the session, highlighting the broad troubles for the market. But energy names notably diverged following the Middle East report, with the S&P 500 sector climbing more than 2%.

Tech names felt the brunt of Tuesday's declines, explaining the Nasdaq's outsized losses. Tesla, Nvidia and Apple all ended the day lower. But Facebook parent Meta Platforms bucked this trend, posting an all-time intraday high.

Small-cap stocks also took a hit, with the Russell 2000 sliding 1.5%.

Traders were also monitoring a strike by members of the International Longshoremen's Association on the East and Gulf coasts. While consumers may not feel the pinch immediately, the stoppage could cost the U.S. economy hundreds of millions of dollars.

Stocks come off winning month and quarter

Tuesday's pullback comes after the S&P 500 and the Dow notched closing records in the previous session, which marked the end of the trading month and quarter. September is typically the worst month of the year for stocks, but this time it broke with past trends.

All three major averages posted monthly gains, and it was the first positive September for the S&P 500 since 2019. The S&P 500, Dow and Nasdaq also ended the third quarter in positive territory.

Stocks advanced Monday even after Federal Reserve Chair Jerome Powell said the central bank is "not on any preset course" when it comes to the next steps for rate policy. He said to expect two more cuts this year — that is, a quarter percentage point each — if the economy performs as anticipated.

Investors will now look to September's nonfarm payrolls report on Friday, which could serve as a catalyst for the major averages.

Stocks finish lower

Stocks ending Tuesday's session in the red, kicking off the new trading month and quarter on a sour note.

The Dow lost about 0.4%. The S&P 500 slid 0.9%, while the Nasdaq Composite dropped 1.5%.

— Alex Harring

Don't worry, there's enough Rao's inventory to weather port strike

The dockworkers' strike at East and Gulf Coast ports is unlikely to impact Campbell Soup, according to Piper Sandler.

"CPB imports Rao's pasta sauce from Italy, but it has healthy levels of inventory on hand, and management believes it can weather a strike duration of up to two weeks or so," the investment firm wrote in a note to clients.

Piper added that a port strike could "take up to a week to clear" upon the return of union workers to their jobs. "We will continue to monitor the situation, but do not consider material disruptions to be likely at this time," the firm continued.

Campbell Soup shares posted their sixth straight day of losses on Monday, and Piper's target implies about 4% downside ahead from Monday's close. This year, shares have jumped more than 13%.

— Sean Conlon

Stocks head for losses

Stocks remain down but off session lows as the final hour of trading kicked off.

The Dow traded down 0.2%. The S&P 500 slipped 0.7%, while the Nasdaq Composite lost 1.2%.

— Alex Harring

Nasdaq losers beat winners 2.4-to-1 Tuesday; on NYSE only 1.3-to-1

Market breadth is far worse on the Nasdaq Stock Market, where the number of declining stocks is beating advancing stocks by roughly 2.4 to 1, than on the New York Stock Exchange, where losers are beating winners by roughly 1.3 to 1, according to FactSet data.

Declining volume on the Nasdaq amounts to more than 63% of all shares traded in late afternoon trading, against 51% on the NYSE.

New 52-week lows on Nasdaq outnumber new highs by 137 to 123, while new 52-week highs swamp new lows on the NYSE, 177 to 27.

Trading isn't particularly active, with NYSE Composite volume running more than 61% of the past 30 days' average, and Nasdaq Composite volume standing at about 77% of the past 30 days.

— Scott Schnipper

Harris and Trump mostly aligned on defense, says Morgan Stanley

Kamala Harris and Donald Trump are more aligned than they are different on national security issues; meaning there should not be significant changes to the defense sector after the presidential election, per Morgan Stanley.

This "should keep capital return momentum intact," analyst Kristine Liwag wrote in a Tuesday note.

"Historically, GOP electoral gains have supported sector sentiment," Liwag said.

The sector is currently trading at around a 10% discount relative to the S&P 500, versus its historical average of a 5% discount, the analyst added

— Hakyung Kim

China is at 'the fork of the road,' says IMF's Georgieva

China's economy is now at a crossroads following its bold stimulus rollout after months of worries regarding sluggish growth, property sector concerns and high youth unemployment, says International Monetary Fund managing director Kristalina Georgieva.

Georgieva began her second term as managing director of the global financial institution on Tuesday.

"Our message to China is, look, you are on the fork of the road. You either stay with your past development model that was export driven growth, and then you find yourself with more difficulties with your trading partners, or you help your economy to go in a more dynamic phase through domestic consumption," Georgieva told CNBC's "Squawk on the Street" on Tuesday.

The managing director noted that much of the stimulus measures align with the IMF's prior recommendations made to China.

— Hakyung Kim

S&P 500 has seen best start to an election year ever, Carson Group says

The S&P 500 has clinched its strongest first nine months in a presidential election year on record, according to Carson Group data.

The broad index notched a 20.8% gain through the end of September's trading month, which concluded with Monday's closing bell. That's the highest for this period of the year for any with an election going back to 1950, the data shows.

Before 2024, the previous record was set in 1976. In that year, the S&P 500 had climbed 16.7% in the nine-month timeframe.

CNBC Pro subscribers can read more here.

— Alex Harring

Halliburton, Lockheed Martin among the names making moves midday

Some stocks are making big moves in midday trading:

• New Fortress Energy – Shares of the natural gas company popped 17% after New Fortress priced its underwritten public offering of roughly 46 million shares at $8.63 per share through Morgan Stanley. Deutsche Bank reduced its price target and downgraded New Fortress to sell on Tuesday, citing the pending dilution of equity and its view that the stock carries "too much risk inherent" to the company's business model.
• Energy stocks – U.S. crude oil futures rose 4% on worries that Iran is preparing to attack Israel, sending shares of energy companies higher. APA Corp jumped 5%, while Halliburton added 3%. Hess and Occidental Petroleum each jumped more than 2%. Energy was the top performing sector of the S&P 500, up nearly 2%.
• Defense stocks – Defense stocks rose on Tuesday after the White House warned that Iran was preparing an "imminent" ballistic missile attack on Israel. Shares of Lockheed Martin and Northrop Grumman were last trading higher by 3.7% and 4.1%, respectively. L3Harris Technologies advanced 3%.

Read here for the full list.

— Sean Conlon

36 S&P 500 stocks notch fresh highs

Thirty-six S&P 500 stocks were reaching fresh highs during midday trading on Tuesday, including mega-cap tech stock Meta Platforms.

Here are some of those names:

• Live Nation Entertainment (LYV) trading at levels not seen since April 2022
• Meta Platforms (META) trading at all-time high levels back to its IPO in May 2012
• eBay (EBAY) trading at levels not seen since Jan. 2022
• Hasbro (HAS) trading at levels not seen since Sept. 2023
• NVR, Inc. (NVR) trading at all-time high levels back to post-bankruptcy IPO in Nov. 1993
• Tractor Supply (TSCO) trading at all-time highs back to its IPO in 1994 after being taken private by an LBO in 1982
• Lockheed Martin (LMT) trading at all-time high levels back to their merger of Martin Marietta and Lockheed in 1995
• Raytheon Technologies (RTX) trading at all-time highs back to when the United Technologies name was adopted in 1975

On the other hand, one stock dipped to a fresh low: Dow component Boeing fell to levels not seen since Nov. 2022.

— Sarah Min, Chris Hayes

Defense stocks catch a bid and cruise lines are knocked as Mideast tensions mount

Defense manufacturers that stand to benefit from increased demand for military hardware outperformed the market Tuesday after a U.S. official told NBC News that Iran is readying an "imminent" ballistic missile attack against Israel.

Northrop Grumman, maker of the B-21 stealth bomber, and Lockheed Martin, the prime contractor for the F-35 fighter, each climbed about 4% in late morning trading, while RTX Corp., the maker of the Patriot missile system, rose about 2.25%. General Dynamics added about 0.4%, and Huntington Ingalls inched up 0.1% in a down market.

The $6.2 billion, 35-stock iShares US Aerospace & Defense ETF (ITA) was about 0.8% higher. The ITA has performed about in line with the broader market this year, gaining 19% against the S&P 500 rally of 19.5%.

At the same time, tourist cruise line stocks slumped Tuesday as concern grew that bookings and sailings might be hurt by an increase in geopolitical conflict. Carnival Corp. slid 4.4%, Norwegian Cruise Line lost 3%, and Royal Caribbean Cruises gave back 2.6%.

— Scott Schnipper

U.S. crude oil spikes nearly 4% on fears Iran will attack Israel

U.S. crude oil jumped nearly 4% on Tuesday as the White House warned that Iran is preparing for an imminent attack against Israel.

U.S. crude rose $2.61 to trade at 3.83% late morning, while global benchmark Brent jumped 3.6%, or $2.58, to $74.28 per barrel.

Tensions in the Middle East have escalated dramatically over the past week, as Israel has pounded the Iran-backed militia Hezbollah with airstrikes and dispatched ground troops in southern Lebanon.

The impact on the oil market will depend on the "scope and damage" caused by an Iranian attack, which in turn will drive Israel's response, said Bob McNally, president of Rapidan Energy.

Iran launched hundreds of ballistic missiles and drones against Israel in April, but the U.S. and its allies foiled that attack. This gave space for Israel to retaliate with small strike in Iran that did not further escalate the situation.

McNally said "the crude risk premium should quickly dissipate" if there is a repeat of "April's failed Iranian and restrained Israel exchanges."

He cautioned, however, that Israel has increasingly adopted a "three eyes for an eye" approach to attacks from regional enemies.

— Spencer Kimball

Technology sector struggles

The Technology Select Sector SPDR Fund (XLK) dropped 2.4% in morning trading and headed for its worst day in nearly a month.

HP Inc. and Dell Technologies were among the worst performers in the sector, slumping about 4% each. Apple shed more than 3%, along with Intel, Micron Technology and Applied Materials. Advanced Micro Devices, Nvidia and Microsoft lost more than 2% each.

The Nasdaq Composite dropped 1.7%, led to the downside by Apple, Nvidia and Microsoft. Broadcom, Tesla and Amazon also contributed to the losses, slumping at least 2% each.

— Samantha Subin

Israeli stock market on pace for worst day since Sept. 8

The Israeli stock market sold off Tuesday as Middle East tensions intensified. The Tel Aviv 35 Index (.TA35) fell 1.4% on the day, on pace for the first negative day in eight and the worst day since Sept. 8.

White House and Defense Department officials told NBC News that the U.S. "has indications that Iran is preparing to imminently launch a ballistic missile attack against Israel."

"We are actively supporting defensive preparations to defend Israel against this attack. A direct military attack from Iran against Israel will carry severe consequences for Iran," a senior White House official told NBC.

The MSCI Israel ETF (EIS), a U.S.-listed fund, slid more than 2%.

— Yun Li, Gina Francolla

Gold rises on Middle East tensions

Gold prices rose 1% on Tuesday following reports of possible escalation in the Middle East between Iran, Lebanon and Israel.

The commodity is considered a safe-haven asset during periods of political and economic unrest.

SPDR Gold Shares, a fund that tracks the metal, also jumped 1% on the news.

— Sean Conlon

Energy outperforms Tuesday

The energy sector climbed 1.6% Tuesday, outperforming the broader market as crude oil prices spiked on fears of an imminent attack by Iran against Israel.

APA led the gains with a 3.2% advance, while Marathon Oil, Halliburton and ConocoPhillips all rose more than 2% each.

— Hakyung Kim

Job openings rise, manufacturing slips further

Job openings totaled more than expected in August while the U.S. manufacturing sector slipped further into decline during September, according to economic data released Tuesday.

• The Labor Department's Job Openings and Labor Turnover Survey showed that new positions rose to just over 8 million, an increase of 329,000 from July and better than the Dow Jones estimate of 7.7 million. The rate as a share of the labor force rose to 4.8%, up 0.2 percentage point.
• However, hiring declined by 99,000 to 5.32 million, though total separations tumbled below 5 million for the first time since August 2020, putting the separations rate at 3.1%, tied for the lowest since December 2012.
• The ISM manufacturing reading for September came in unchanged at 47.2%, representing the share of companies reporting expansion. That was slightly below the 47.5% forecast. The employment, inventories and prices indexes all showed declines, while the production measure rose.

— Jeff Cox

VIX jumps as tensions in Middle East intensify

The Cboe Volatility Index (VIX) spiked above 19 on Tuesday, hitting its highest level since Sept. 11, as traders sought safety amid growing tensions in the Middle East.

NBC News reported, citing White House and Defense Department officials, that the U.S. "has indications that Iran is preparing to imminently launch a ballistic missile attack against Israel."

"We are actively supporting defensive preparations to defend Israel against this attack. A direct military attack from Iran against Israel will carry severe consequences for Iran," the White House official said.

— Fred Imbert

S&P 500 opens little changed

The S&P 500 opened Tuesday's session little changed, a muted start to the new trading month and quarter.

The broad index and Nasdaq Composite each shed 0.2% shortly after 9:30 a.m. ET. The Dow slipped 0.3%.

— Alex Harring

Charles Schwab announces CEO change

Charles Schwab is changing CEOs, as the brokerage firm announced that Walt Bettinger will retire from the job at the end of the year. Charles Schwab President Rick Wurster will take over.

Bettinger, who turns 65 next year, has been in the top job at Schwab since 2008. He will remain as co-chair of the company's board.

"Rick Wurster and I have worked together on a daily basis for more than eight years. I have complete confidence in his leadership, and I am thrilled that the Schwab Board of Directors has selected him as my successor," Bettinger said in a statement.

Shares of Schwab were little changed in premarket trading.

— Jesse Pound

AI chip startup files for IPO

Artificial intelligence chipmaker and Nvidia competitor Cerebras Systems filed its prospectus for an initial public offering Monday.

The company will trade on the Nasdaq under the ticker symbol "CBRS."

According to filings, Cerebras posted a net loss of $66.6 million and $136.4 million in sales during the first six months of the year.

— Samantha Subin, Kif Leswing, Jordan Novet

Stocks making the biggest moves premarket

Check out the companies making headlines before the bell:

• Ford Motor — The automaker jumped 2.3% after Goldman Sachs upgraded shares to buy from neutral. The firm highlighted its growing software and services and Super Duty vehicles as potential tailwinds. 
• Disney — Shares of the media company slipped around 0.9% following a downgrade by Raymond James to market perform from outperform. Analyst Ric Prentiss believes Disney's parks segment is coming under pressure.
• CVS Health – Shares rose 2% after CNBC, citing people familiar with the matter, reported that CVS is working with advisors on a strategic review of its business. Reuters first reported the news that the company is exploring options, which may include a potential breakup.

The full list can be found here.

— Hakyung Kim

CVS shares rise after strategic business review comes to light

CVS shares rose in Tuesday's premarket after CNBC reported that the pharmacy chain is working with advisors on a strategic business review.

The review has been ongoing, but it's unclear what actions, if any, will come as a result, people familiar with the matter told CNBC. This unearthed detail comes as the Rhode Island-based chain grapples with potential activist pressure.

Shares have tumbled more than 20% in 2024, placing the stock on track for its third straight losing year.

— Alex Harring, Rohan Goswami

East and Gulf coast ports shut down as workers go on strike

Billions of dollars in trade came to a halt Tuesday after members of the International Longshoremen's Association in East and Gulf coast ports went on strike. While consumers may not feel the pinch immediately, the stoppage could cost the U.S. economy hundreds of millions of dollars.

— Fred Imbert

Stellantis shares fall for a second day

Stellantis shares fell more than 1% in the premarket after the automaker said it would extend a production halt on electric Fiat 500s until next month, citing poor demand.

That decline comes a day after the stock dropped 12.5% — its biggest one-day drop since March 16, 2020, when it shed 21.6%.

— Fred Imbert

Bank of America says solid jobs data could give stocks a boost

Another pivotal U.S. jobs report this week will determine the market's direction, and Bank of America strategists think it's likely to push stocks to more record highs.

"Risk is to the upside, absent [a] big miss," the Wall Street firm said in a note to clients Sunday. "We think the data will reinforce our outlook for a soft landing. Economic momentum is cooling, not crumbling."

Bank of America noted that because nonfarm payroll data had been weak in July and August, the bar is low for a relief rally.

— Yun Li

S&P 500's 20% gain through three quarters could bode well for Q4

Another good quarter is in the books. The S&P 500 rose for the fourth straight quarter for the first time since the seven straight quarters of gains ended in Q4 2021.

So far this year, the S&P 500 is now up more than 20%, with three quarters done. That's the first time since 1997 that the index has risen 20% or more through the first nine months of the year.

It's a rare feat, too. This is just the 10th time it has happened since 1950.

Bulls will also take note that in almost all cases, the S&P 500 has finished the year much higher after this strong of a start. In fact, only once — during the 1987 crash year — has the S&P 500 fared significantly worse by the end of the year after such a strong showing in the first nine months.

— Robert Hum

Stocks futures open little changed

Stocks futures opened little changed on Monday, as equities concluded September trading with gains.

Futures tied to the S&P 500 ticked down 0.1%, alongside Nasdaq 100 futures. Dow Jones Industrial Average futures ticked down 64 points, or 0.1%.

— Brian Evans