Indexes added to losses in afternoon trading. The Cboe Volatility index climbed.
Reuters reported, citing three U.S. officials, that the U.S. military is deploying more fighter aircraft to the Middle East and extending the deployment of other warplanes.
President Donald Trump called for Iran’s “unconditional surrender.” The war began on Friday when Israel attacked Iran’s nuclear facilities.
“We’re in a period where visibility is not great, uncertainty is high, and the wall of worry is under construction,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management in Minneapolis, Minnesota.
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Besides the Middle East conflict, investors are closely watching for any new information on Trump’s tariffs, his tax-cut bill and U.S. interest rates. The Federal Reserve is expected to announce a monetary policy decision on Wednesday, although policymakers are expected to leave rates unchanged. All of the major S&P 500 sectors were lower except for energy , which gained along with sharply higher oil prices. Investors have worried that the conflict could create bottlenecks for oil exports from the oil-rich Middle East. According to preliminary data, the S&P 500 lost 51.06 points, or 0.85%, to end at 5,982.05 points, while the Nasdaq Composite lost 180.12 points, or 0.92%, to 19,521.09. The Dow Jones Industrial Average fell 305.20 points, or 0.72%, to 42,209.89.
Earlier Tuesday, data showed U.S. retail sales dropped more than expected in May, while factory production barely rose last month.
“A data-dependent Fed is going to have a lot of explaining to do about why it’s not responding to the data,” said Brian Jacobsen, chief economist at Annex Wealth Management.
Among declining stocks, solar stocks fell after U.S. Senate Republicans late on Monday unveiled proposed changes to Trump’s tax-cut bill, including a phase-out of solar, wind and energy tax credits by 2028.
Shares of Enphase Energy and Sunrun dropped.
Eli Lilly shares eased after it agreed to acquire Verve Therapeutics for up to $1.3 billion. Shares of Verve surged.
