US stocks closed lower Tuesday for the second consecutive session as a sell-off in major technology companies and uncertainty over the Iran conflict weighed on investor sentiment. The Dow Jones Industrial Average fell 184.13 points, or 0.34%, to 53,791.85, while the S&P 500 declined 24.92 points, or 0.32%, to end at 7,728.19. The Nasdaq Composite dropped 159.91 points, or 0.6%, to 26,445.45, marking the second consecutive session of losses for both major indices. Communication services was the weakest-performing sector in the S&P 500, falling more than 1%, with Alphabet shares losing about 3.6% and AppLovin declining approximately 6%. Apple shares dropped more than 1%, while Nvidia erased earlier gains and closed slightly lower despite the company announcing Monday that it was partnering with six major asset managers to mobilize more than $500 billion for AI infrastructure investment.
Persistent uncertainty surrounding US-Iran negotiations continues to weigh on global market sentiment, with Iranian officials reiterating their firm stance against negotiations. Iranian officials reiterated that the strategic waterway would remain closed until Tehran's conditions were met, with Foreign Minister Abbas Araghchi stating that negotiations could not resume unless the US complied with a June framework agreement and compensated Iran for alleged violations. Iran has explicitly ruled out any future negotiations with US President Donald Trump, with reports indicating that Tehran intends to wait until the current US presidential term ends on January 20, 2029, before considering a return to the bargaining table. President Donald Trump rejected Iran's demand for war reparations, saying he would instead rely on continued economic pressure, reinforcing market concerns that a diplomatic breakthrough may not be imminent.
Rising concerns over potential oil supply disruptions have fueled inflation fears, leading to growing speculation that the Federal Reserve may feel compelled to raise interest rates sooner than expected, even against the backdrop of a cooling labor market. According to the CME FedWatch Tool, the market-implied odds of a 25-basis-point rate hike in September have climbed to nearly 52%, up from 44.4% just a day prior. Jim Reid's team at Deutsche Bank notes that the broader US equity complex softened, with the NASDAQ (-0.32%) and Russell 2000 (-0.56%) also losing ground. They highlight that "energy (+4.63%) and health care (+1.68%) sectors helped limit the S&P 500's decline," even as the tech space came under renewed pressure, with chipmakers leading losses as the Philly semi index dropped -2.94% after its +9.25% rebound last week. Investors are awaiting July consumer inflation figures Wednesday and producer inflation data Thursday for clues about the Federal Reserve's next monetary policy steps.
Oil prices rose amid the uncertainty, with US benchmark West Texas Intermediate crude gaining 1.5% to $83.4 per barrel, while international benchmark Brent crude rose around 1.6% to $89.1. WTI crude oil remains elevated in the $83–$84 per barrel range, keeping concerns over inflation, India's import bill, corporate margins, and rupee stability firmly in focus. Oil prices remained at more than one-week highs on Tuesday as hopes for an agreement between Washington and Tehran faded, with ongoing disruption around the Strait of Hormuz raising concerns about oil supplies and added to inflationary pressures globally. The latest weak US employment data has reduced expectations for further rate increases, making upcoming inflation figures particularly important for investors assessing the path of monetary policy.
European stock exchanges ended Tuesday's session with mixed performance as investors monitored diplomatic efforts involving the US and Iran. The pan-European Stoxx Europe 600 index edged up 0.01% to 660.51 points, while Germany's DAX 40 rose 0.26% to 26,391.42. Italy's FTSE MIB 30 gained 0.08% to 53,706.21, and Spain's IBEX 35 also climbed 0.2% to end the day at 20,213.60. However, Britain's FTSE 100 fell 0.17% to 10,844.19, and France's CAC 40 declined 0.13% to 8,714.94. The mixed performance reflects varying investor sentiment across different European markets as they navigate geopolitical tensions and their potential impact on global energy markets.
