US stocks ended Tuesday’s session mixed after recovering from much steeper losses, with investors caught between enthusiasm for artificial intelligence, concerns over inflation and a fresh escalation in tensions between the United States and Iran.
The S&P 500 slipped 0.3% while the Nasdaq Composite finished 1% lower, having clawed back a large portion of earlier losses that at one stage exceeded 3%. The Dow Jones Industrial Average edged 0.2% higher as money continued rotating away from high-growth technology names.
Chipmakers led the decline after giving back earlier gains. Nvidia, Micron Technology and Broadcom all moved lower, extending a recent pattern in which investors have taken profits from some of the market’s biggest AI winners while reassessing the outlook for interest rates.
That shift in sentiment comes ahead of Wednesday’s closely watched Consumer Price Index report, which could influence expectations for Federal Reserve policy. Persistent inflation remains a concern for markets, particularly as rising energy prices threaten to add further pressure to consumer costs.
Hopes of progress in US-Iran peace talks faded as the session unfolded. Markets were initially encouraged after President Donald Trump suggested negotiations were moving in the right direction, although sentiment shifted sharply after he later announced that the United States would respond to an Iranian attack on an American military helicopter.
The latest flare-up centred on the Strait of Hormuz, one of the world’s most important oil shipping routes, where supply disruption fears have kept traders focused on the potential inflationary impact of higher crude prices.
Oil prices remained volatile throughout the session. Brent crude trimmed earlier declines to trade around $91.50 a barrel after falling more than 3% earlier in the day, while US benchmark WTI crude hovered near $88 after recovering from losses exceeding 4%.
Investors are now turning their attention to a potentially busy period for Wall Street. SpaceX is expected to make its stock market debut on Friday in what could become the largest public offering ever completed, while OpenAI revealed after Monday’s close that it had confidentially filed for an initial public offering. The move follows a similar filing by rival Anthropic, raising the prospect that two of the most prominent artificial intelligence firms could begin trading publicly as soon as this autumn.
For now, however, inflation data and events in the Middle East remain the dominant forces driving market sentiment, leaving investors braced for another potentially volatile trading session.
