US stocks drop on growing worries over Middle East
Trader Dylan Halvorsan, right, works on the floor of the New York Stock Exchange. (AP Photo/Richard Drew)
NEW YORK, United States — US stocks fell Tuesday after President Donald Trump hardened his rhetoric on the fighting between Iran and Israel. The conflict sparked worries of a broadening conflict.
In social media posts, Trump appeared to demand Iran’s “UNCONDITIONAL SURRENDER!” while hinting at a possible US intervention as the fighting moved into its fifth day.
READ: Israeli strikes damage Iran’s underground nuclear site – IAEA
“It’s not going in the right direction,” Art Hogan, chief market strategist of B. Riley Wealth. Hogan was describing Tuesday’s tone after markets had advanced Monday on hopes the conflict was contained.
The Dow Jones Industrial Average finished down 0.7 percent at 42,215.8.
The broad-based S&P 500 dropped 0.8 percent to 5,982.72. Meanwhile, the tech-rich Nasdaq Composite Index shed 0.9 percent to 19,521.09.
Market’s new focal point
Anxiety about Iran and Israel has emerged as the market’s focal point at a time when investors are also watching the Federal Reserve. The Fed opened a two-day monetary policy meeting.
READ: US Federal Reserve could cut rates if tariffs reduced, says official
The central bank is expected to keep interest rates steady as it eschews interest rate cuts for now while monitoring the effects of Trump’s tariffs on inflation.
On Wednesday, the Fed is also due to release its latest economic projections on growth, unemployment and inflation.
Markets digested weaker than expected US economic data. Overall US retail sales fell in May by 0.9 percent from April to $715.4 billion. These figures suggested a pullback from April’s surge in buying to beat out tariffs.
While 10 of 11 sectors in the S&P 500 retreated, the exception was energy, which was buoyed by higher oil prices.
Defense-related stocks were another gainer, with Lockheed Martin winning 2.6 percent and Northrop Grumman 1.2 percent.
