U.S. stocks slipped on Tuesday following reports of potential conflict in the Middle East, which dampened investor optimism despite a strong close to the previous quarter, according to a report by Alex Harring and Biran Evans for CNBC. The Dow Jones Industrial Average dropped by 346.71 points (0.82%), while the S&P 500 and Nasdaq Composite fell 1.35% and 2.12%, respectively.
Crude oil prices spiked after news that Iran might be preparing to launch a ballistic missile at Israel. This development, reported by a senior White House official, sent shockwaves through the market, driving the CBOE Volatility Index (VIX), Wall Street’s “fear gauge,” above 20—indicating heightened anxiety among traders.
“The fear of contagion is always destabilizing,” said Keith Buchanan, senior portfolio manager at Globalt Investments, noting that these geopolitical tensions can directly hit the market beyond the critical human impact.
About 80% of S&P 500 stocks traded lower, reflecting the broad market downturn. However, energy stocks surged by over 1% in response to the Middle East tensions, outperforming other sectors. Meanwhile, technology stocks faced the steepest losses, with Apple and Tesla falling over 3% and 4%, respectively. Nvidia also dipped more than 2%, while Meta bucked the trend, inching closer to its all-time high.
Small-cap stocks were also hit, with the Russell 2000 index dropping more than 1%.
Tuesday’s losses followed a strong session on Monday, where the S&P 500 and Dow hit record highs, closing out a positive month and quarter. Investors are now awaiting Friday’s nonfarm payrolls report, which could act as a key market catalyst.
In light of the escalating tensions, spot gold rose nearly 1% to $2,659.60 per ounce, with the precious metal acting as a safe-haven asset during times of political and economic uncertainty, while Bitcoin seems to be acting like a risk asset today, trading at around $62,112, down 2.6% in the past 24-hour period.
Featured Image via Pixabay
