The Dow joined the S&P 500 in negative territory, while the Nasdaq eked out a nominal gain as US President Donald Trump 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 market was showing some strength and it has given all that back,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York. “There’s a lot of confusion among investors.”
“You see these headlines coming out of the White House that give the market hope, and then clearer heads prevail and markets realize this is nowhere near over,” Ghriskey added.
The indexes wavered through early-session trepidation as US Defence Secretary Pete Hegseth 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 labour 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 the Middle East until US-Israeli attacks ceased, which prompted threats from Trump that he would strike back “20 times harder” if they blocked crude exports.
Additionally, the Trump administration 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 Chris Wright announced on Tuesday that the US Navy had successfully escorted an oil tanker through the crucial waterway, a claim that the White House later walked back.
US and Brent front-month crude futures settled down over 11 percent. Both benchmarks logged the biggest single-day percentage loss since March 2022, after rocketing to four-year highs a day earlier.
“When you see that type of a parabolic move, whether it’s in gold or oil or anything else, you tend to get a pretty violent reversal as soon as you get some news on the other side,” said Paul Nolte, senior wealth adviser and market strategist at Murphy & Sylvest in Elmhurst, Illinois.
The Dow Jones Industrial Average fell 34 points, or 0.1 percent, to 47,706, the S&P 500 lost 14 points, or 0.2 percent, to 6,781 and the Nasdaq Composite gained 1 point to 22,697.
Of the 11 major sectors in the S&P 500, tech was the sole gainer, while energy, hurt by falling crude prices, suffered the largest percentage loss.
Chipmakers were higher on Tuesday, with Nvidia up 1.2 percent, while SanDisk and Western Digital advanced 5.1 percent and 1.6 percent, respectively. (Reuters)
Edited by Cecil Wong
