The Dow Jones Industrial Average fell on Tuesday as traders moved past rising oil prices and escalating Middle East conflicts. The decline came despite earlier gains driven by strong corporate earnings reports. By midday, the Dow was down 0.8%, while the S&P 500 dropped 0.6% and the Nasdaq Composite lost 0.5%. Analysts pointed to a shift in market sentiment as investors reassessed geopolitical risks that had driven oil prices above $90 per barrel earlier in the week.
Trading volumes were moderate, with 1.2 billion shares changing hands on the New York Stock Exchange. The CBOE Volatility Index, often called the market's fear gauge, rose to 16.2 from 15.1 the previous session. Technology shares led the decline, with Apple falling 1.3% after closing at $192.40. Microsoft dropped 1.1% to $433.20, and Nvidia slid 2.4% to $118.70. Energy stocks were mixed as oil prices stabilized. Brent crude was up 0.3% at $91.80 per barrel, while West Texas Intermediate held at $88.50.
The retreat follows a four-day rally that pushed the S&P 500 to within 2% of its record close on July 15. That rally was fueled by better-than-expected second-quarter earnings from major banks and tech firms. But on Tuesday, traders took profits as they weighed fresh reports of clashes in the Red Sea and Iran's threat to block a key shipping lane. The U.S. Energy Information Administration reported last week that crude inventories fell by 4.5 million barrels, the largest draw since January, tightening supply concerns.
Federal Reserve policymakers are scheduled to meet next week to discuss interest rate policy. Traders are pricing in a 62% chance of a 25-basis-point rate hike, according to CME Group's FedWatch tool. The benchmark 10-year Treasury yield rose to 4.15%, up from 4.08% Monday, reflecting expectations of tighter monetary policy. The U.S. dollar index strengthened 0.3% against major currencies, pressuring gold prices, which fell 0.7% to $1,950 per ounce.
Corporate earnings season continues with 15 companies in the S&P 500 set to report this week. On Tuesday, Coca-Cola reported adjusted earnings per share of $0.78, beating estimates by $0.03. Revenue came in at $11.3 billion, slightly above forecasts. Shares of Coca-Cola rose 1.2% in after-hours trading. Later this week, Tesla is expected to release its quarterly vehicle delivery numbers on Wednesday, followed by Meta Platforms on Thursday. Analysts will focus on guidance for capital expenditures and artificial intelligence investments.
The market's pullback comes as traders adjust to a new reality where geopolitical risks no longer dominate headlines as they did in the first half of the year. Instead, attention has turned to earnings, interest rates, and the Fed's next move. The shift mirrors the market's behavior in late 2022, when traders initially reacted to Russia's invasion of Ukraine but later focused on the Fed's aggressive rate hikes. This time, the transition has been quicker, with oil prices retreating from their peak of $95 per barrel earlier this month.
Source: e24.no