BY COMFORT OGBONNA
U.S. stocks ended lower on Tuesday as renewed uncertainty over the conflict in the Middle East weighed on investor sentiment, while declines in major technology companies including Amazon and Alphabet put additional pressure on the broader market.
The S&P 500 fell 0.32% to 7,728.20, while the Nasdaq Composite declined 0.60% to 26,445.45. The Dow Jones Industrial Average dropped 0.34% to 53,791.85.
Investor concerns increased after an Iranian security official said the Strait of Hormuz would remain closed unless the United States changed its position and accepted Iran’s conditions for ending the conflict. The comments raised fresh concerns about the possibility of a prolonged disruption to energy supplies and added uncertainty to financial markets.
Oil prices moved higher as investors assessed the potential impact of continued tensions in the region. Higher energy costs have become an important concern for investors because a sustained increase in oil prices could add to inflation and complicate decisions by central banks.
“As has been the case for months, it’s just really hard to come to an agreement that works for everyone. Oil is a little higher, pricing in more uncertainty around that,” said Ross Mayfield, an investment strategy analyst at Baird.
The conflict has periodically triggered sharp movements across financial markets, although its overall impact on U.S. stocks has so far been less severe than some investors initially feared.
Amazon shares fell 2.1%, while Alphabet declined 3.8%, making both companies significant drags on the S&P 500 and Nasdaq. SpaceX also declined nearly 4%.
The technology sector has remained an important driver of the U.S. stock market this year as investors continue to assess the enormous spending required to develop artificial intelligence infrastructure. Strong earnings and signs that large investments in AI data centers are beginning to generate returns have helped support market valuations despite broader economic and geopolitical concerns.
Shares of alternative asset managers moved in the opposite direction. Apollo Global Management gained 6.2%, while Blackstone rose nearly 4%. Both companies were among financial institutions that recently partnered with Nvidia on financing platforms designed to mobilize more than $500 billion for AI computing infrastructure.
Despite Tuesday’s decline, market breadth remained relatively positive. Advancing stocks on the S&P 500 outnumbered declining stocks by about 1.2 to 1. The index recorded 22 new 52-week highs and one new low, while the Nasdaq posted 108 new highs and 75 new lows.
The S&P 500 reached record territory last week, helped by strong quarterly earnings and continued enthusiasm surrounding artificial intelligence. The Nasdaq, however, remains about 2% below its record closing level reached June 2.
Investors are now turning their attention to key inflation data expected over the next two days. Consumer and producer price reports are expected to provide further clues about the direction of inflation and could influence expectations for the Federal Reserve’s next policy decisions.
Markets remain divided over the possibility of an interest-rate increase at the central bank’s September meeting. The outlook has become more complicated as higher energy prices linked to the Middle East conflict raise concerns that inflation could remain elevated.
Central banks around the world are also facing a difficult policy environment. While weaker economic growth could encourage policymakers to consider easier monetary conditions, higher energy prices could push inflation higher and make rate cuts or other forms of monetary easing more difficult.
Among individual stocks, Jabil gained 5.9% after UBS upgraded the electronics manufacturing company’s shares to “buy” from “neutral.”
Sportswear company On fell 20.3% after reporting quarterly sales that failed to meet market expectations, highlighting signs that some consumers may be becoming more cautious about discretionary spending.
Venture Global, a liquefied natural gas company, fell 7.3% after its second-quarter revenue came in slightly below expectations. The company, however, raised its forecast for core profit for the year for the second consecutive quarter.
Trading activity was relatively subdued. About 15 billion shares changed hands on U.S. exchanges, below the 20-session average of roughly 17.6 billion shares.
The mixed performance reflected a market balancing several competing forces, including strong corporate earnings, continued enthusiasm for artificial intelligence, uncertainty over interest rates and growing concerns about geopolitical risks and energy prices.
Investors are expected to closely watch inflation data and developments in the Middle East for further clues about the direction of markets in the coming sessions.
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