U.S. stocks fell on Tuesday as the ongoing conflict between Israel and Iran heightened investor concerns, with the U.S. military deploying additional fighter jets to the Middle East.
Market Response to Middle East Conflict
Indexes extended their losses in afternoon trading, and the Cboe Volatility Index (.VIX) climbed to 21.6, marking its highest close since May 23. The U.S. military is increasing its presence in the Middle East, according to Reuters, citing three U.S. officials.
Impact on Energy and Defense Sectors
Energy stocks were the only major S&P 500 sector to rise, driven by a sharp increase in oil prices amid fears of export disruptions from the Middle East. Defense stocks, including Lockheed Martin (LMT.N), also saw gains, with Lockheed Martin rising 2.6%.
Market Outlook and Economic Indicators
Terry Sandven, chief equity strategist at U.S. Bank Wealth Management, noted the market’s uncertainty and potential for sideways trading until more clarity emerges. Investors are also focused on developments regarding U.S. tariffs, tax policies, and interest rates, with a Federal Reserve decision expected on Wednesday.
Mixed Performance Across Sectors
The Dow Jones Industrial Average (.DJI) dropped 299.29 points, or 0.70%, to 42,215.80. The S&P 500 (.SPX) fell 50.39 points, or 0.84%, to 5,982.72, and the Nasdaq Composite (.IXIC) declined 180.12 points, or 0.91%, to 19,521.09. Solar stocks declined following proposed changes to tax credits, with Enphase Energy (ENPH.O) and Sunrun (RUN.O) experiencing significant losses.
Corporate Developments and Economic Data
Eli Lilly (LLY.N) shares decreased by 2% after announcing a $1.3 billion acquisition of Verve Therapeutics (VERV.O), whose shares surged. Meanwhile, U.S. retail sales fell more than expected in May, and factory production showed minimal growth. Brian Jacobsen, chief economist at Annex Wealth Management, commented on the growing caution among consumers.
On the NYSE, declining issues outpaced advancers by a 2.07-to-1 ratio, with 97 new highs and 77 new lows. On the Nasdaq, 1,325 stocks rose while 3,130 fell, resulting in a 2.36-to-1 ratio of declining to advancing issues. Trading volume on U.S. exchanges reached 15.71 billion shares, below the 20-day average of 17.98 billion.
