U.S. stocks finished mixed Tuesday after a volatile session tied to the war between Israel and Iran and a renewed deadline from President Donald Trump that was set to expire Tuesday evening. The S&P 500 closed slightly higher and the Nasdaq Composite also ended a touch above flat, while the Dow Jones Industrial Average fell 0.2%.
Markets caught a brief lift in the afternoon after Pakistan proposed a two-week extension to Trump’s deadline, helping stocks recover from earlier losses. Earlier in the day, Trump had posted on Truth Social that “a whole civilization will die tonight, never to be brought back again,” a warning that underscored how quickly traders were reacting to the risk of a wider conflict. For investors watching the S&P and other major averages, the day turned on whether the deadline would lead to de-escalation or a fresh round of strikes.
That caution was reinforced by oil’s swings. Media reports said the U.S. carried out strikes on military targets across Kharg Island, home to Iran’s major oil shipment facility, while West Texas Intermediate crude briefly dipped 0.8% to top $111 a barrel and Brent fell nearly 3% to $106. Both benchmarks later steadied somewhat, with WTI down fractionally at $112 per barrel and Brent off 2% at $107 per barrel.
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The backdrop for the market moves was a rush for any sign of a truce as Trump’s renewed deadline approached, with oil surging earlier in the day and stocks falling before reversing later. Chicago Federal Reserve Bank president Austan Goolsbee said Tuesday he was worried that the energy shock from the Iran war could turn “stagflationary,” a warning that captures the risk traders were trying to price without much confidence in where the conflict goes next.
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The question now is less whether markets can absorb one more headline than whether the next one pushes energy costs higher again and drags stocks back into the same pattern of fear, rebound and fear again.
