U.S. stocks ended lower on Tuesday, as escalating geopolitical tensions and disappointing retail sales data weighed on investor sentiment.
The Dow Jones Industrial Average fell by 299.29 points, or 0.70 percent, to 42,215.8. The S&P 500 sank 50.39 points, or 0.84 percent, to 5,982.72. The Nasdaq Composite Index shed 180.12 points, or 0.91 percent, to 19,521.09.
Ten of the 11 primary S&P 500 sectors ended in red, with health and consumer discretionary leading the laggards by losing 1.64 percent and 1.55 percent, respectively. Meanwhile, energy bucked the trend by adding 1.03 percent.
All major indexes extended losses and closed lower after U.S. President Donald Trump was demanding Iran's "unconditional surrender" on his social media account, and claiming the United States knows the location of the country's leader.
French President Emmanuel Macron said Monday that Trump offered a ceasefire between Iran and Israel. However, Trump said his departure from the G7 had "nothing to do with a Cease Fire. Much bigger than that."
Markets had staged a cautious rebound on Monday amid reports Iran was open to ceasefire negotiations and restarting talks over its nuclear program. But on Tuesday, fresh headlines indicated the United States is contemplating military strikes, increasing the threat of prolonged instability in the Middle East.
Alongside geopolitical anxiety, investors are also contending with renewed uncertainty around trade policy. As the deadline nears for lifting the pause on Trump-era tariffs, U.S. officials are scrambling to cement new trade agreements during the G7 summit. A trade deal was finalized Monday between Trump and British Prime Minister Keir Starmer, but progress with other partners remains elusive.
Adding to the pressure was a disappointing read on U.S. retail sales, which fell 0.9 percent in May, more than economists had expected. The decline suggests that consumers may have front-loaded spending in anticipation of higher prices from incoming tariffs and are now pulling back.
"The economy is slowing with consumers nervous about exactly what lies ahead and are choosing to save overall rather than flash some cash at the shops and malls," said Chris Rupkey, Fwdbonds chief economist.
