US stocks opened lower on Tuesday as renewed uncertainty over the Middle East conflict dampened momentum from the previous session’s rally.
Investors grew cautious despite US President Donald Trump’s decision to delay military strikes on Iran, with conflicting signals around diplomatic progress keeping markets on edge.
Markets slip as geopolitical uncertainty returns
The S&P 500 index and Nasdaq 100 fell 0.42% and 0.56%, respectively, while the Dow Jones Industrial Average declined 338 points or 0.73%.
The downturn comes after a sharp rally in the previous session, when all three major indexes surged more than 1% following Trump’s announcement of a five-day pause in planned strikes on Iranian energy infrastructure.
The move had briefly boosted hopes of a diplomatic resolution.
However, uncertainty resurfaced quickly after Iranian officials denied that any direct negotiations with the United States had taken place, contradicting Trump’s claims of “productive talks.”
Israeli officials also indicated that while Trump is seeking a deal, meaningful progress remains unlikely in the near term.
Oil rebounds, rate outlook remains uncertain
Oil prices resumed their upward trend on Tuesday, reversing some of the sharp declines seen a day earlier.
Brent crude rose more than 3% to trade above $103 per barrel, while West Texas Intermediate gained over 4% to move past $91.
The rebound in energy prices has reignited concerns about inflation, complicating the outlook for monetary policy.
The US Federal Reserve had already struck a hawkish tone last week, projecting only one rate cut in 2026.
Market expectations have shifted significantly in response to the geopolitical developments.
Money markets are no longer pricing in any rate cuts this year, compared with expectations for two reductions before the escalation in Middle East tensions.
While expectations for a rate hike briefly eased after Trump’s comments on Monday, they have since stabilized, according to CME’s FedWatch Tool, amid ongoing uncertainty.
Investors are also closely watching upcoming economic data, including a flash estimate of S&P Global’s business activity gauge for March, along with remarks from Fed Governor Michael Barr.
Private credit concerns weigh on sentiment
Adding to market pressure, concerns around the private credit sector resurfaced after reports that major asset managers have begun limiting investor withdrawals.
Ares Management and Apollo Global Management both capped redemptions at 5% in their private credit funds as withdrawal requests surged.
The moves mirror similar actions taken earlier this month by BlackRock and Morgan Stanley, highlighting broader stress in the nearly $2 trillion private credit market.
Shares of Ares and Apollo fell 4.7% and 4.1%, respectively, while peers including Blackstone, Blue Owl Capital, and KKR also declined between 1.6% and 2.7%.
Barclays raised its year-end 2026 target for the S&P 500 to 7,650 from 7,400, citing stronger earnings expectations that it believes will offset macroeconomic risks, including Middle East tensions, AI-driven disruption, and pressures in private credit markets.
Despite Monday’s rally, major US indexes remain under pressure, with all three benchmarks having recorded their fourth consecutive weekly decline last week.
The Nasdaq posted its steepest weekly drop since early February.
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