Oil surge, Blackstone rout and volatility spike weigh on US equities; S&P 500 slips below key technical level
US stocks ended lower on Tuesday as investors fretted that the escalating conflict in the Middle East could persist long enough to rekindle inflationary pressures and complicate the Federal Reserve’s policy path.
Selling was broad-based, with the Dow Jones Industrial Average falling 403.51 points, or 0.83 per cent, to 48,501.27. The S&P 500 declined 64.99 points, or 0.94 per cent, to 6,816.63, while the Nasdaq Composite shed 232.17 points, or 1.02 per cent, to 22,516.69.
The Cboe Volatility Index registered its highest closing level since November, underscoring heightened investor anxiety. However, the main indexes finished well above their intraday lows, with the S&P 500 trimming losses after sliding more than 2 per cent earlier in the session.
Markets are increasingly concerned that the conflict, now in its fourth day, could disrupt energy supplies and drive oil prices higher. Israeli and US forces struck targets across Iran, prompting retaliatory action around the Gulf and raising fears of wider regional spillover.
“There seems to be some notion that perhaps the conflict will persist longer than people thought 24 hours ago, because it’s spreading and starting to potentially impact energy infrastructure,” Chuck Carlson, chief executive officer at Horizon Investment Services in Indiana, told Reuters.
Despite the selloff, Tuesday marked a second straight session in which US benchmarks clawed back steep early losses, suggesting investors are not yet in full panic mode.
Jed Ellerbroek, portfolio manager at Argent Capital, said the market’s reaction so far appeared “very tame”, indicating that risk appetite remains somewhat intact. Notably, the S&P 500 software and services index outperformed, rising 1.6 per cent, even as broader markets weakened.
Technical breach raises caution
In a potentially bearish signal for technical traders, the S&P 500 closed below its 100-day moving average for the first time since November 20 — a level often seen as an indicator of medium-term momentum.
“Investors are grappling with the volatility and the news, and they’re looking at their portfolios and saying this could get worse,” said Oliver Pursche, senior vice president and advisor at Wealthspire Advisors in Connecticut. “But our advice to clients is to take a step back and wait and see.”
Among individual stocks, shares of Blackstone fell 3.8 per cent after its flagship credit fund, BCRED, experienced a surge in redemption requests, adding to concerns around liquidity in private credit markets.
Oil shock, policy risks
Tehran’s threat to target vessels transiting the Strait of Hormuz, a key artery for global energy supplies, has amplified market jitters. The strait accounts for roughly one-fifth of global oil consumption. Production halts by several Middle Eastern oil and gas producers have also driven up shipping rates and pushed crude and natural gas prices higher.
In response, US President Donald Trump said he had directed the US International Development Finance Corporation to provide political risk insurance and financial guarantees for maritime trade in the Gulf. He added that the US Navy could begin escorting oil tankers through the Strait of Hormuz if required.
Rising oil prices have rekindled fears that inflation — already under pressure from tariff-related price increases — could accelerate again. Higher energy costs could complicate central bank decision-making at a time when policymakers are balancing growth concerns with price stability.
Reflecting these worries, US Treasury yields rose for a second consecutive session.
Market breadth weak
Market breadth underscored the defensive tone. On the New York Stock Exchange, declining issues outnumbered advancers by a 4.1-to-1 ratio, with 137 new highs and 167 new lows recorded.
On the Nasdaq, 1,262 stocks advanced while 3,540 declined, translating into a nearly 2.8-to-1 ratio in favour of decliners.
For now, investors appear to be pricing in a prolonged period of geopolitical uncertainty — one that could keep volatility elevated and inflation risks in sharp focus in the days ahead.
With inputs from agencies.
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