Major United States benchmark averages finished in a mixed fashion on Tuesday (Wednesday AEST), recovering from earlier losses as traders pinned hopes on a last-minute diplomatic breakthrough between the United States and Iran.
The Dow Jones Industrial Average slipped 85.4 points or 0.2% to end the session at 46,584.5, the S&P 500 added 5.0 points or 0.1% to close at 6,616.9, while the Nasdaq Composite added 21.5 points or 0.1% to finish at 22,017.9.
Markets staged a late-session rebound after comments from Shehbaz Sharif signalled progress in diplomatic efforts to de-escalate the Middle East conflict.
In a post on X, Sharif said negotiations were “progressing steadily” and urged Donald Trump to extend his deadline on Iran by two weeks, while calling on Tehran to reopen the Strait of Hormuz over the same period as a goodwill gesture.
Investors had been bracing for an 8 pm ET deadline set by Trump for Iran to reach an agreement or face potential U.S. strikes on key infrastructure.
Earlier in the day, Trump heightened tensions in a Truth Social post, warning: “A whole civilization will die tonight, never to be brought back again. I don’t want that to happen, but it probably will.”
At the same time, he left open the possibility of a peaceful outcome, adding: “Now that we have Complete and Total Regime Change, where different, smarter, and less radicalised minds prevail, maybe something revolutionarily wonderful can happen, WHO KNOWS?”
The president’s remarks kept markets volatile throughout the session, initially dragging equities lower and pushing oil prices higher before sentiment stabilised into the close.
Concerns over the economic fallout from the conflict persisted. Austan Goolsbee warned that the war could stoke inflation while weakening growth, raising the risk of a stagflationary shock and complicating the Federal Reserve’s policy path.
Meanwhile, the Commerce Department reported that durable goods orders fell 1.4% in February, greater than an expected decline of 0.5%.
Attention now turns to upcoming inflation data, with the Labor Department’s consumer price index report later this week expected to provide further insight into how the Iran conflict is influencing price pressures.
On the corporate front, healthcare stocks rallied after the U.S. government announced increased payments to private insurers offering Medicare Advantage plans.
Shares of UnitedHealth Group surged 9.4%, while Humana and CVS Health climbed 7.9% and 6.7%, respectively.
In the technology sector, Apple declined 2.1% following a report that its anticipated foldable device is facing engineering setbacks.
Meanwhile, Broadcom gained 6.2% after securing a long-term agreement with Alphabet to develop artificial intelligence chips and components.
Intel rose 4.2% after announcing its participation in Elon Musk’s Terafab AI chip complex project, alongside SpaceX, Tesla and xAI.
On the bond markets, yields moved lower, with the 10-year Treasury yield falling 0.9% to 4.301%, while the 2-year yield declined 1.3% to 3.8%.
