US Stocks Give Back Gains As Iran War Uncertainty Returns/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ Stocks slipped as optimism over Iran talks faded. Oil prices rose again amid continued Middle East strikes. Investors remain cautious about inflation and interest rates.
Quick Looks
- S&P 500 falls after Monday’s rally
- Oil prices rebound amid ongoing conflict
- Treasury yields rise, pressuring markets
- Iran denies negotiations with U.S.
- Fed rate-cut expectations fade further
- Private-credit and corporate news add pressure
Deep Look: US Stocks Give Back Gains As Iran War Uncertainty Returns
U.S. stocks pulled back Tuesday as optimism surrounding potential negotiations between the United States and Iran faded, while oil prices resumed climbing amid continued military strikes across the Middle East.
The shift came just one day after markets surged on comments from President Donald Trump suggesting that the U.S. and Iran had engaged in productive discussions that could lead to an end to the conflict. That optimism cooled quickly as Iran denied talks and fighting continued.
The S&P 500 fell 0.4% in morning trading, giving back more than a third of its gains from the previous session. The Dow Jones Industrial Average dropped 127 points, or 0.3%, while the Nasdaq composite declined 0.8%.
Meanwhile, oil prices reversed course after Monday’s sharp drop. Brent crude rose 2.9% to $102.84 per barrel, recovering part of the more than 10% decline seen the day before. Benchmark U.S. crude also jumped 4.1% to $91.73 per barrel.
The rebound in oil prices reflects ongoing concerns about supply disruptions tied to the Iran conflict, particularly around the Strait of Hormuz, a key shipping route for global energy supplies.
Investors remain wary that continued instability in the Persian Gulf could drive inflation higher. Rising energy costs increase pressure on central banks, including the Federal Reserve, to keep interest rates elevated.
Bond markets also signaled renewed concern. The yield on the 10-year Treasury rose to 4.38% from 4.34% late Monday, well above its level before the war began. The two-year Treasury yield climbed to 3.89%, reflecting shifting expectations for Federal Reserve policy.
Earlier this year, traders anticipated multiple interest rate cuts. However, rising oil prices and inflation risks have caused investors to scale back those expectations. Some traders are now even betting that the Fed may raise rates later this year.
Higher interest rates typically slow economic growth and weigh on investment prices, adding further pressure to financial markets.
Corporate developments also contributed to market volatility. Estee Lauder shares dropped 9.3% after confirming merger talks with Spanish cosmetics company Puig. The potential deal could combine major brands including MAC, Clinique, Charlotte Tilbury and Apivita, though no final decision has been announced.
Concerns about the private-credit market also weighed on investor sentiment. A fund linked to Apollo Global Management limited withdrawals after investors sought to redeem more than 11% of assets. Apollo’s stock fell 4.9% following the announcement.
Some companies provided positive momentum. Smithfield Foods rose 7.6% after reporting stronger-than-expected quarterly profit and revenue, helping limit broader market losses.
Global markets showed mixed reactions. Asian markets rose after getting their first opportunity to react to Trump’s comments about possible negotiations, with Hong Kong’s Hang Seng jumping 2.8% and South Korea’s Kospi climbing 2.7%.
European markets, meanwhile, traded unevenly as investors weighed the uncertainty surrounding diplomacy and continued military action.
The market swings highlight how sensitive investors remain to developments in the Iran conflict. Optimism about diplomacy can quickly lift markets, while renewed fighting or uncertainty can just as rapidly reverse gains.
With airstrikes continuing and negotiations still unclear, volatility is likely to remain high as investors monitor developments in both geopolitics and monetary policy.
You must Register or Login to post a comment.