US equities pulled back on Tuesday, giving up part of the previous session’s gains as rising oil prices and uncertainty around the ongoing Iran conflict weighed on investor sentiment.
Markets struggled to find direction amid conflicting signals on diplomacy and escalating geopolitical risks, while higher Treasury yields added further pressure.
The S&P 500 fell 0.37% to close at 6,556.37.
The Dow Jones Industrial Average declined 0.18%, or 84.41 points, to 46,124.06, while the Nasdaq Composite dropped 0.84% to 21,761.89.
Oil rally and geopolitics weigh on sentiment
Markets were pressured by a renewed surge in crude prices as the Iran war entered its fourth week.
Global benchmark Brent crude rose 4.55% to settle at $104.49 per barrel, while West Texas Intermediate crude gained 4.79% to $92.35.
The rise in energy prices helped lift the energy sector, which climbed 2% and remained the only S&P 500 sector in positive territory for the month, with gains exceeding 9%.
Geopolitical developments remained fluid. US President Donald Trump said Washington was “in negotiations right now” with Iran, adding that “the other side, I can tell you, they’d like to make a deal.”
His earlier comments about “very good and productive conversations” had driven a rally in the prior session, though Iranian officials denied direct talks.
Investor uncertainty intensified as Israel and Iran continued exchanging strikes despite diplomatic signals.
Reports that the Pentagon may deploy around 3,000 additional troops to the Middle East added to concerns, even as Pakistan offered to facilitate talks.
Volatility persists amid rate and inflation concerns
Markets oscillated throughout the session, reflecting an environment described by analysts as highly reactive.
Rising oil prices and Treasury yields have reinforced concerns about a “greater for longer” interest rate environment.
A weak auction of two-year US Treasury notes pushed yields higher, adding pressure on equities.
Economic data also pointed to slowing momentum.
A survey showed that US business activity fell to an 11-month low in March as higher energy costs weighed on input prices.
Corporate and credit developments in focus
Beyond macro concerns, developments in corporate and credit markets added to the cautious tone.
Private credit risks resurfaced after reports that Ares Management and Apollo Global Management limited redemptions at their funds amid rising withdrawal requests.
Among individual stocks, Jefferies rose after reports that Sumitomo Mitsui Financial Group is considering a potential takeover.
Meanwhile, Estée Lauder shares fell after confirming merger talks with Spain’s Puig.
Crypto-related stocks like Circle and Coinbase saw huge downward pressure after US lawmakers reportedly planned to stop exchanges from offering rewards for holding stablecoins in the Clarity Act.
Despite near-term volatility, some optimism persists.
Barclays raised its 2026 year-end target for the S&P 500 to 7,650 from 7,400, citing stronger earnings expectations that could offset macro risks.
For now, however, markets remain caught between geopolitical uncertainty, rising energy prices, and shifting monetary policy expectations, leaving investors braced for continued volatility.
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