Wall Street closed sharply lower on Tuesday, pulled down by tech, industrial and healthcare stocks. Trading was dominated by a risk-off, cautious mood, with investors staying concerned about escalating geopolitical tensions and rising inflation fears that drove them toward safe-haven positions and away from risk assets. All of the three benchmark indexes ended in the red.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) lost 0.8%, or 403.51 points, to close at 48,501.27. Nineteen components of the 30-stock index ended in negative territory, while 11 ended in the positive.
The tech-heavy Nasdaq Composite slid 232.17 points, or 1%, to close at 22,516.69.
The S&P 500 fell 64.99 points, or 0.9%, to close at 6,816.63. All of the 11 broad sectors of the benchmark index closed in the red. The Materials Select Sector SPDR (XLB), the Industrials Select Sector SPDR (XLI), the Health Care Select Sector SPDR (XLV) and the Technology Select Sector SPDR (XLK) declined 2.7%, 2%, 1.1% and 1.1%, respectively. The S&P 500 closed below its 100-day moving ???average for the first time in three and a half months.
The fear gauge CBOE Volatility Index (VIX) increased 9.9% to 23.57. Decliners outnumbered advancers by a 4.1-to-1 ratio on the NYSE and by 2.81-to-1 on the Nasdaq.
Oil Surge and Inflation Fears Rattle Wall Street
U.S. stocks closed sharply lower on Tuesday as investors grappled with mounting concerns that the intensifying Middle East conflict could stoke inflation. The situation escalated as coordinated U.S.-Israeli strikes targeted key Iranian military and strategic facilities. Iran retaliated with missile and drone attacks across the region, including near U.S. interests in the Gulf. The violence expanded toward Lebanon, casualties rose sharply and diplomatic evacuations signaled deepening regional instability.
With the crisis entering its fourth day, oil prices extended strong gains, heightening fears that energy-driven cost pressures may linger. The S&P 500 ended down 0.9% after sliding more than 2% earlier in the session, reflecting volatile trading. Investors are increasingly worried that higher crude prices could complicate central bank policy at a time when tariff-related price pressures are already straining the outlook. The slump in the U.S. markets was broad-based.
Consequently, shares of Intel Corporation INTC and Caterpillar Inc. CAT plunged 5.3% and 4%, respectively. Both currently carry a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Rising Treasury Yields Signal Policy Unease
Markets remained under pressure as investors closely monitored movements in the bond market alongside geopolitical developments. Treasury yields climbed for a second straight session, with both the benchmark 10-year and the policy-sensitive 2-year yields moving higher. The benchmark 10-year Treasury yield climbed more than 1 basis point (bp) to 4.063%, after touching an intraday high of 4.117%. The 2-year Treasury yield advanced nearly 2 bps to 3.506%.
The advance in yields reflected growing concerns that persistent inflation risks could limit the Fed’s flexibility. With oil prices surging and tariff-related costs already filtering through the economy, bond investors appear to be pricing in a more cautious policy stance. Although equities recovered from their steepest intraday losses, the steady rise in yields underscored lingering uncertainty about the interest-rate outlook and broader financial conditions.
No economic data was released on Tuesday.
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Intel Corporation (INTC): Free Stock Analysis Report Caterpillar Inc. (CAT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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