US stocks closed lower on Tuesday, reversing earlier gains as geopolitical uncertainty surrounding Iran and concerns about the Federal Reserve’s independence weighed on investor sentiment.
Markets had initially found support from strong corporate earnings and economic data, but those gains faded as the session progressed.
The Dow Jones Industrial Average fell 293 points, or 0.59%, to 49,149.38.
The S&P 500 declined 0.63% to 7,064.01, while the Nasdaq Composite slipped 0.59% to 24,259.96.
The pullback comes after a strong run in recent weeks, during which major indices had reached record highs on optimism around a potential resolution to the Iran conflict.
Iran tensions erase early gains
Investor sentiment deteriorated after reports indicated that progress toward a US-Iran peace deal may be stalling. Vice President JD Vance’s planned trip to Pakistan for negotiations was reportedly paused due to a lack of commitment from Tehran, raising doubts about near-term diplomatic progress.
Earlier in the day, President Donald Trump struck an optimistic tone, saying he expects the US and Iran to make a “great deal.” However, he also warned that military action remains an option and reiterated that he does not want to extend the ceasefire deadline.
The conflicting signals added to market volatility.
Oil prices, which had recently declined on hopes of a deal, reversed course sharply. West Texas Intermediate crude rose 2.81% to settle at $92.13 per barrel, while Brent crude gained 3.14% to $98.48.
Earnings strength and AI optimism offer support
Even as geopolitical risks weighed on markets, underlying fundamentals provided some support. First-quarter earnings have come in strong, with expectations for double-digit growth and solid revenue performance.
Economic data also reinforced resilience. US retail sales rose 1.7% in March, the largest increase since March 2025, driven in part by higher gasoline prices amid the Iran conflict.
Corporate developments further buoyed sentiment. UnitedHealth shares surged more than 8% after beating earnings expectations and raising its outlook.
Meanwhile, Amazon shares rose over 1% after the company announced plans to invest up to $25 billion in artificial intelligence startup Anthropic, underscoring continued momentum in AI-driven spending.
Broader optimism around artificial intelligence and technology earnings has been a key driver of recent market strength, with analysts expecting around 14% earnings growth for the quarter.
Fed independence concerns add uncertainty
Investors also focused on developments at the Federal Reserve, as Kevin Warsh’s Senate confirmation hearing drew attention to the central bank’s independence.
Warsh sought to reassure lawmakers that he would act independently if confirmed, stating he had made no promises to President Trump regarding interest rate decisions. His comments come amid ongoing political pressure on the Fed and scrutiny over its policy direction.
The situation is further complicated by political dynamics in Washington. Republican Senator Thom Tillis has pledged to block Warsh’s confirmation until a Department of Justice investigation into current Fed Chair Jerome Powell is resolved.
The impasse could delay leadership changes at the central bank and introduce additional uncertainty into monetary policy.
Markets also reacted to rising Treasury yields, as strong economic data and higher oil prices prompted traders to scale back expectations for near-term rate cuts.
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