U.S. stocks faced a significant decline as oil prices surged, impacting major indices on Tuesday. The S&P 500 fell by 0.8% amidst escalating tensions between Israel and Iran, coupled with indications of economic weakening. The Dow Jones Industrial Average and the Nasdaq composite also experienced losses of 0.7% and 0.9%, respectively. The surge in crude oil prices, with benchmark U.S. crude jumping by 4.3% to $74.84 per barrel, further exacerbated the market downturn. President Trump’s remarks urging “unconditional surrender” in the Israel-Iran conflict added pressure, leading to heightened concerns about oil supply disruptions.

The possibility of increased oil and gasoline prices due to Iran’s significant oil production and its strategic location heightened market volatility. Concurrently, solar stocks plummeted amidst concerns over potential tax credit phase-outs for alternative energy sources. Treasury yields decreased following a report indicating lower retail sales, impacting consumer spending trends. Notable stock movements included Jabil’s 8.2% surge and Verve Therapeutics’ 81.3% rise following a buyout announcement by Eli Lilly.

As the Federal Reserve convened a two-day meeting on interest rates, market expectations leaned towards no immediate policy changes. The Fed’s cautious approach in light of economic uncertainties, including the impact of tariffs and inflation, underscored the central bank’s current stance. Future market focus will be on the Fed’s economic forecasts and interest rate projections. Global markets mirrored the U.S. downturn, with European indexes slipping after a mixed performance in Asian markets. The Bank of Japan’s decision to maintain its key interest rate influenced positive movement in Tokyo’s Nikkei 225 index.