US stocks declined on Tuesday after Donald Trump weighed into the debate by calling for residents of Tehran to immediately evacuate Iran’s capital city.
US stocks fell on Tuesday morning as investors assessed the impact of the intensifying military conflict between Israel and Iran. Futures tied to the Dow Jones Industrial Average fell by 0.7%, while the S&P 500 and Nasdaq 100 futures each dropped around 0.6%.
The declines in US stocks come despite equities showing recent resilience. Monday closed on a positive note after speculation that Iran may seek renewed nuclear talks and a ceasefire.
The two nations continued to trade strikes against a backdrop of shifting US trade policy. There also remains a very real prospect of elevated interest rates going forward.
Trump’s latest comments drive US stocks lower
Speaking aboard Air Force One following his departure from the G7 summit in Canada, Donald Trump stated that he was now seeking a ‘real end’ to Iran’s nuclear programme.
The US president said: “we’re looking at better than a ceasefire…a real end. Not a ceasefire. An end.” He also vowed to “come down so hard” on Iran if US interests in the region are targeted.
Trump has had a lot to say on the issue in recent days. In a post on his Truth Social platform on Monday, he wrote: “Iran should have signed the “deal” I told them to sign. What a shame, and waste of human life. Simply stated, IRAN CAN NOT HAVE A NUCLEAR WEAPON. I said it over and over again! Everyone should immediately evacuate Tehran!”
Shortly after Trump’s posts, the S&P 500 futures dipped as much as 0.6%. This move signalled mounting investor concern over the deepening instability in the Middle East. Meanwhile, oil climbed almost 2% as fears grew over possible disruptions to supply.
Tensions between Israel and Iran intensify
The situation in the Middle East remains extremely volatile. Despite initial hopes of a de-escalation, Israel continues to carry out strikes across Iran, targeting key missile and nuclear infrastructure.
In response, Tehran has conducted multiple waves of drone and missile attacks, leading to high civilian casualties and a further escalation of the conflict.
President of Iran, Masoud Pezeshkian, has pledged to retaliate proportionally, emphasising that while Iran does not seek broader war, it will not tolerate attacks on its soil without consequence. As of Tuesday morning, Iranian sources report 224 deaths, mostly civilians, while Israeli casualties total 24.
Domestic trade and rate policy remains on the agenda
Geopolitical events continue to take precedence over national policy decisions. However, the US remains locked in trade negotiations with G7 partners. A new trade agreement with the UK was confirmed on Monday, but wider deals remain in progress as the deadline for Trump’s tariff pause approaches.
Despite this, the overall outlook for interest rates remains uncertain. With inflation pressures lingering, markets are wary that the Federal Reserve may hold rates higher for longer, adding another layer of caution for investors.
Political tensions are growing domestically. Lawmakers on both sides are beginning to question the scope of the country’s involvement in the Middle East, with some calling for a formal vote to limit military engagement.
As Washington weighs up these serious issues alongside global economic pressures, markets are likely to remain on edge in the short term.Don’t forget to track all the very latest Market News at FXTrustScore.com.
