Wall Street indexes edged lower on Tuesday amid a volatile session, as investors grappled with concerns about rising oil prices and the ongoing U.S.-Israeli conflict with Iran. Market sentiment fluctuated following U.S. President Trump’s claims of progress in negotiations with Iran, contrasted by reports of potential troop deployments to the Middle East. Rising U.S. Treasury yields, fuelled by war uncertainty and a weak auction of 2-year Treasury notes, further pressured equity markets.
Energy prices surged, with crude oil futures settling over 4% higher. This revival of inflation jitters complicated the interest rate outlook for central banks, particularly after the U.S. Federal Reserve’s recent hawkish stance. Market analysts highlighted the potential for a ‘stagflationary backdrop’ due to the combination of higher oil prices and interest rates, which could negatively impact economic growth.
The Dow Jones Industrial Average fell 84.41 points, or 0.18%, to 46,124.06. The S&P 500 lost 24.63 points, or 0.37%, to 6,556.37, and the Nasdaq Composite declined 184.86 points, or 0.84%, to 21,761.89. Within the S&P 500, four of the 11 major industry sectors closed lower, with communication services leading the losses. Elsewhere, shares of Ares Management, a leading global alternative investment manager, experienced a decline after limiting redemptions at its private credit fund amid increased withdrawal requests. Jefferies shares rose following reports of a potential takeover by Sumitomo Mitsui Financial Group.
