NEW YORK: Wall Street’s main indexes fell on Tuesday as investors scrutinized developments for clues on what might come next in the Middle East conflict, before President Donald Trump’s deadline for Iran to reopen the Strait of Hormuz. Trump threatened that “a whole civilization will die tonight” as Iran showed no sign of accepting his ultimatum to open the Strait of Hormuz by Tuesday evening, Washington time.
The Wall Street Journal reported that Iran had cut off direct diplomacy with the US, but state-run newspaper Tehran Times said on X that channels of talks were not closed.
A US official told Reuters that the country had struck military targets on Iran’s Kharg Island, a hub of Iran’s oil exports, in signs that the conflict would not end swiftly. “Considering the rhetoric that’s coming from President Trump, the markets are nervous but they’re not collapsing … we’re not seeing any signs of panic,” said Peter Cardillo, chief market economist at Spartan Capital Securities. “It’s a question … markets are waiting to see what the final result of Trump’s threats will be.”
Tech stocks weighed heavily, with the S&P 500 information technology index down 1.4percent. Apple lost 4.2percent after a report said its foldable phone has been encountering setbacks in its engineering test phase, which could lead to production delays.
The stock was the biggest drag on all three indexes. A 3.7percent gain in Broadcom after the chipmaker signed a long-term deal with Alphabet’s Google to develop its AI chips and other components helped limit declines. On the flip side, energy stocks on the S&P 500 added 1percent.
At 11:48 a.m. ET, the Dow Jones Industrial Average fell 428.65 points, or 0.92percent, to 46,241.23, the S&P 500 lost 60.97 points, or 0.92percent, to 6,550.76 and the Nasdaq Composite lost 274.02 points, or 1.25percent, to 21,722.32. Meanwhile, UnitedHealth jumped 8.8percent and peers Humana and CVS Health added 6.5percent and 6.7percent, respectively, after the US said on Monday it would raise payments to private insurers offering Medicare Advantage plans to older adults, an increase from the near-flat change proposed earlier.
Wall Street’s main indexes closed higher on Monday, marking the fourth consecutive session of gains for the S&P 500 and the Nasdaq, as investors digested the Middle East developments and positioned for the upcoming quarterly earnings season. This week, markets will scrutinize some inflation readings to see if the elevated crude prices stemming from the conflict have impacted price pressures in the economy.