U.S. stocks lost steam on Tuesday, with the S&P 500 giving up early gains to skid into negative territory as investors weighed fading hopes for an earlier-than-expected end to the U.S.-Israeli war on Iran against a backdrop of renewed military threats and ongoing worries of economic stagflation. The Dow joined the S&P 500 in negative territory, while the Nasdaq eked out a nominal gain as the U.S. President reacted to reports that Iran was deploying mines in the crucial Strait of Hormuz with threats of retaliation and renewed calls for Iran’s total surrender.
The indexes wavered through early-session trepidation as U.S. Defense Secretary warned that Tuesday would be the most intense day thus far of strikes against Iran. The conflict has sparked a jump in crude prices, which has fueled worries over inflation against a backdrop of a weakening labor market – a toxic combination of rising costs and a softening economy called stagflation.
Earlier in the session, the market remained hopeful that a near-term resolution could be reached, despite an announcement by Iran’s Revolutionary Guards that the country would not allow any oil to leave thes Middle East until U.S.-Israeli attacks ceased, which prompted threats from the President that he would strike back “20 times harder” if they blocked crude exports. Additionally, the White House indicated a potential willingness to end oil sanctions against Russia, which eased upward pressure on oil prices, while also raising the possibility of progress toward ending Russia’s war on Ukraine.
Prior to reports of Iran deploying mines in the Strait of Hormuz, Energy Secretary announced on Tuesday that the U.S. Navy had successfully escorted an oil tanker through the crucial waterway, a claim that the White House later walked back. U.S. CLc1 and Brent LCOc1 front-month crude futures settled down over 11%.
The Dow Jones Industrial Average .DJI fell 34.29 points, or 0.07%, to 47,706.51, the S&P 500 .SPX lost 14.51 points, or 0.21%, to 6,781.48 and the Nasdaq Composite .IXIC gained 1.16 points, or 0.01%, to 22,697.10. Of the 11 major sectors in the S&P 500, tech .SPLRCT was the sole gainer, while energy .SPNY, hurt by falling crude prices, suffered the largest percentage loss. Chipmakers were higher on Tuesday, with Nvidia NVDA.O NVDA.O up 1.2%, while SanDisk SNDK.O SNDK.O and Western Digital WDC.O WDC.O advanced 5.1% and 1.6%, respectively.
The S&P Software & Services Select Industry Index .SPLRCIS .SPLRCIS , battered in recent months over fears of AI-related disruption, was once again the clear underperformer, falling 1.7%. Health insurer Centene CNC.N CNC.N fell more than 16% after it reaffirmed its 2026 profit forecast. Shares of Oracle ORCL.N ORCL.N gained over 7% in extended trading after the company released its quarterly earnings report.
Economic data expected later this week has the potential to move markets. This includes the Labor Department’s Consumer Price Index, the Commerce Department’s second take on fourth-quarter GDP and its broad Personal Consumption Expenditures report. Declining and advancing issues on the NYSE were evenly distributed. There were 71 new highs and 63 new lows on the NYSE. On the Nasdaq, 2,332 stocks rose and 2,420 fell as declining issues outnumbered advancers by a 1.04-to-1 ratio. The S&P 500 posted 3 new 52-week highs and 5 new lows while the Nasdaq Composite recorded 65 new highs and 101 new lows. Volume on U.S. exchanges was 19.90 billion shares, compared with the 20.10 billion average for the full session over the last 20 trading days.
Reporting by Stephen Culp in New York; Additional reporting by Johann M Cherian and Utkarsh Tushar Hathi in Bengaluru; Editing by Matthew Lewis.
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