Stocks under pressure from war: US sends fighter jets, markets drown in uncertainty

The war began on Friday after an Israeli attack on Iranian nuclear facilities.

“We are in a period of great uncertainty and limited predictability,” said Terry Sandven, chief strategist at US Bank Wealth Management.

In addition to the escalation in the Middle East, markets are closely watching signals about possible changes in Donald Trump’s trade policy, his planned tax reform and the Fed’s decision on interest rates. The U.S. central bank is due to announce its decision on Wednesday, but most analysts do not expect any changes in rates.

All major sectors of the S&P 500 ended the day in the red, with the exception of energy, which benefited from rising oil prices. Investors are worried that the conflict could disrupt exports of the commodity from the oil-rich region.

According to preliminary data, the S&P 500 index fell 51.06 points (0.85%) on Tuesday, ending the day at 5,982.05 points. The Nasdaq index lost 180.12 points (0.92%) to close at 19,521.09 points, and the Dow Jones index fell 305.20 points (0.72%) to 42,209.89 points.

Sentiment was not improved by weaker-than-expected retail sales data in May and near-stagnant industrial production.

“If the Fed says it is guided by the data, it will have to explain why it is not reacting to these numbers,” said Brian Jacobsen, chief economist at Annex Wealth Management.

Renewable energy companies were among the biggest losers, with stocks like Enphase Energy and Sunrun falling after Senate Republicans proposed phasing out renewable energy tax credits by 2028 as part of amendments to Donald Trump’s so-called tax bill.

In the currency market, the euro fell 0.37 percent on Tuesday to $1.1516, while the pound lost 0.5 percent to $1.3506. The Australian dollar fell 0.22 percent to $0.65103. The dollar index rose 0.3 percent to 98.49.