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US stocks fell on Tuesday after former President Donald Trump intensified his language over the ongoing Iran-Israel conflict, raising fears of a wider escalation that unsettled markets.
In social media posts, Trump called for Iran’s “UNCONDITIONAL SURRENDER!” and hinted at potential U.S. involvement as the hostilities entered their fifth day. The sharp tone shift came after markets had shown optimism on Monday, believing the conflict might remain contained.
“It’s not going in the right direction,” said Art Hogan, chief market strategist at B. Riley Wealth, reflecting the shift in investor sentiment.
The Dow Jones Industrial Average dropped 0.7 percent to close at 42,215.80. The S&P 500 slid 0.8 percent to 5,982.72, and the Nasdaq Composite fell 0.9 percent to 19,521.09.
Geopolitical tensions added to investor concerns ahead of a key Federal Reserve policy decision. The Fed began its two-day meeting Tuesday and is widely expected to hold interest rates steady, taking a cautious stance amid inflationary risks linked to recent tariffs.
Markets also responded to disappointing U.S. retail sales data, which showed a 0.9 percent decline in May to $715.4 billion—suggesting consumer spending slowed after a surge in April to get ahead of new tariffs.
Ten of the S&P 500’s 11 sectors ended the day lower, with energy as the sole gainer thanks to rising oil prices. Defense stocks also bucked the trend, with Lockheed Martin climbing 2.6 percent and Northrop Grumman adding 1.2 percent.
