Stock Market Today: Indexes Retreat as Middle East Tensions Escalate

Market Overview at the Closing Bell

The major U.S. stock indexes pulled back Tuesday as escalating tensions between Israel and Iran rattled investors and sent oil prices higher. At the market close, the S&P 500 fell 0.7% to 5,842, while the Nasdaq Composite dropped 0.9% to 18,765. The Dow Jones Industrial Average declined 310 points, or 0.8%, to finish at 39,450.

“Today’s market retreat reflects growing concerns about geopolitical risks and their potential impact on global energy supplies,” said Michael Reynolds, investment strategist at Glenmede Trust. “The spike in oil prices is particularly troubling for investors who were hoping inflation pressures would continue easing.”

Oil Surges as Middle East Conflict Intensifies

West Texas Intermediate crude futures jumped 1.6% to $72.92 a barrel, while Brent crude gained 1.7% to $76.45. The energy sector was one of the few bright spots in today’s market, with Exxon Mobil (XOM) rising 1.2% and Chevron (CVX) adding 0.9%.

The escalation follows U.S. President Donald Trump’s early departure from the G7 summit in Canada to address the Middle East crisis. Trump’s social media post urging evacuation of Tehran heightened concerns about potential military action, though French President Emmanuel Macron indicated Trump had offered a ceasefire proposal between the warring nations.

Tech Stocks Lead Declines

Technology stocks were among the hardest hit Tuesday, with the sector dropping 1.3%. Semiconductor stocks faced particular pressure after reports of potential supply chain disruptions. Nvidia (NVDA) fell 2.1%, while Advanced Micro Devices (AMD) declined 1.8%.

“Tech investors are reassessing risk exposure given both the geopolitical situation and upcoming earnings reports,” noted Sarah Johnson, chief market strategist at Capital Advisors. “We’re seeing some profit-taking after the strong rally earlier this month.”

Banking Sector Shows Resilience

Despite the broader market decline, banking stocks showed relative strength ahead of next week’s stress test results. JPMorgan Chase (JPM) gained 0.3%, while Bank of America (BAC) finished flat. Goldman Sachs (GS) edged down 0.2%, outperforming the broader market.

“Financial institutions are demonstrating resilience in this volatile environment,” said Robert Chen, financial sector analyst at Morgan Stanley. “Strong capital positions and the prospect of continued higher interest rates are supporting the sector.”

Companies Reporting Earnings After the Close

Several companies are scheduled to report earnings after today’s market close. Investors will be watching La-Z-Boy (LZB) for insights into consumer discretionary spending trends. Analysts expect the furniture maker to report earnings per share of $0.93 on revenue of approximately $557 million.

Technology companies reporting include Quantum Corporation (QMCO), which is expected to post a loss of $1.17 per share, and PodcastOne (PODC), forecast to report a small loss as it continues expanding its digital media footprint.

In the healthcare sector, Vistagen Therapeutics (VTGN) and Beyond Air (XAIR) will provide updates on their drug development pipelines and financial positions. Both companies are expected to report losses as they continue investing in research and development.

Economic Data and Fed Watch

Investors are looking ahead to Federal Reserve Chair Jerome Powell’s testimony before Congress tomorrow, which could provide insights into the central bank’s thinking on interest rates amid rising oil prices and persistent inflation concerns.

“Powell’s comments will be scrutinized for any shift in the Fed’s stance given the recent uptick in energy prices,” said Jennifer Harris, chief economist at Global Investments. “The market is currently pricing in only one quarter-point cut this year, down from expectations of three cuts at the beginning of 2025.”

This morning’s housing starts data showed a 2.3% decline in May, slightly worse than the 2.0% drop economists had forecast, suggesting the housing market continues to struggle with elevated mortgage rates.

Looking Ahead

Market participants will be closely monitoring developments in the Middle East and their potential impact on oil prices and global supply chains. Wednesday brings retail sales data and industrial production figures, which will provide further insights into the health of the U.S. economy.

“The combination of geopolitical tensions and upcoming economic data makes for a potentially volatile trading environment,” warned Thomas Wilson, market strategist at Riverfront Investment Group. “Investors should prepare for increased market swings as these situations develop.”

As earnings season approaches its midpoint, attention will increasingly focus on second-quarter results and guidance for the remainder of 2025, with technology and consumer discretionary sectors facing particularly high expectations.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. We are not financial professionals. The authors and/or site operators may hold positions in the companies or assets mentioned. Always do your own research before making financial decisions.