U.S. stocks ended lower on Tuesday as escalating geopolitical tensions and disappointing retail sales data weighed on investor sentiment.
The Dow Jones Industrial Average fell by 299.29 points, or 0.70 percent, to 42,215.8. The Standard and Poor's 500 Index sank 50.39 points, or 0.84 percent, to 5,982.72. The Nasdaq Composite Index shed 180.12 points, or 0.91 percent, to 19,521.09.
Ten of the 11 primary Standard and Poor's 500 Index sectors ended in red, with health and consumer discretionary leading the laggards by losing 1.64 percent and 1.55 percent, respectively. Meanwhile, energy bucked the trend by adding 1.03 percent.
All major indexes extended losses and closed lower after U.S. President Donald Trump demanded Iran's "unconditional surrender" on his social media account and claimed the United States knows the location of the country's leader.
French President Emmanuel Macron said Monday that Trump offered a ceasefire between Iran and Israel. However, Trump said his departure from the G7 had "nothing to do with a Cease Fire. Much bigger than that."
Markets had staged a cautious rebound on Monday amid reports Iran was open to ceasefire negotiations and restarting talks over its nuclear program. But on Tuesday, fresh headlines indicated the United States is contemplating military strikes, increasing the threat of prolonged instability in the Middle East.
Alongside geopolitical anxiety, investors also contend with renewed uncertainty around trade policy. As the deadline for lifting the pause on Trump-era tariffs nears, U.S. officials are scrambling to cement new trade agreements during the G7 summit. A trade deal was finalized Monday between Trump and British Prime Minister Keir Starmer, but progress with other partners remains elusive.
Adding to the pressure was a disappointing read on U.S. retail sales, which fell 0.9 percent in May, more than economists had expected. The decline suggests that consumers may have front-loaded spending in anticipation of higher prices from incoming tariffs and are now pulling back.
"The economy is slowing with consumers nervous about exactly what lies ahead and choosing to save overall rather than flash some cash at the shops and malls," said Chris Rupkey, Fwdbonds chief economist.
Markets are now focusing on the Federal Reserve's two-day policy meeting, which began on Tuesday. The Fed is widely expected to hold interest rates steady on Wednesday, but investors will watch closely for any changes to the central bank's projections. Questions remain over whether policymakers still anticipate two rate cuts in 2025, especially amid recent signs of easing inflation and fragile consumer demand.
U.S. stocks tumble as geopolitical conflicts, weak data dent sentiment
U.S. stocks tumble as geopolitical conflicts, weak data dent sentiment
U.S. stocks tumble as geopolitical conflicts, weak data dent sentiment
