U.S. stocks took a step back on Tuesday, giving up some of the gains made the day before, as oil prices began to climb once again with the ongoing conflict in Iran now stretching into its fourth week.
The S&P 500 slipped by 0.4%, while the Nasdaq Composite experienced a decline of 0.7%. The Dow Jones Industrial Average fell by 150 points, equating to a drop of 0.3%.
On Monday, all major stock indices had surged over 1% after President Trump remarked in a speech that the U.S. and Iran were engaging in “very good and productive dialogue” aimed at resolving hostilities in the Middle East. However, Iranian state media contradicted this, stating there had been no direct talks between the two nations.
Prior to Trump’s declaration, the U.S. reportedly engaged in a series of private discussions with Iran through intermediaries from the Middle East. A source familiar with the situation indicated some skepticism among Arab mediators regarding the prospects for a swift agreement, emphasizing that significant gaps still exist between the two countries.
Investors on Wall Street are feeling increasingly uncertain about the efficacy of peace talks, especially since Israel and Iran continued their hostilities even after the president’s statements on Monday, according to officials in Israel.
Oil prices saw an uptick on Tuesday after a previous decline, with global benchmark Brent crude futures rising over 3% to exceed $103 per barrel. Meanwhile, West Texas Intermediate Crude Oil Futures increased by 4%, hitting over $92 per barrel.
Despite President Trump’s seemingly optimistic outlook, Citi U.S. equity strategist Scott Kronert expressed caution. “We aren’t quite out of the woods yet,” he highlighted during an appearance on CNBC’s “Closing Bell: Overtime.” He mentioned that there’s still quite a bit of uncertainty surrounding oil prices and their ripple effects on the broader economy. While he feels a 5% to 10% decline might be manageable, the risks remain significant.
This discussion unfolds after President Trump’s weekend comments, where he alluded to potential threats against Iranian power plants if the Strait of Hormuz remains closed. In response, Iran claimed it aims to target U.S. infrastructure as a form of retaliation.
