United States equities closed marginally lower on Monday (Tuesday AEST), retreating from recent record highs as renewed tensions between Washington and Tehran cast doubt over the durability of a fragile ceasefire.
The Dow Jones Industrial Average slipped 4.9 points, or 0.01%, to 49,442.6. The S&P 500 declined 16.9 points, or 0.2%, to 7,109.1, while the Nasdaq Composite fell 64.1 points, or 0.3%, to 24,404.4.
The pullback followed three consecutive weeks of gains for major indices.
Geopolitical developments remained the central driver of market sentiment. Iran is reportedly considering participation in renewed peace talks with the United States in Pakistan, according to a senior official cited by Reuters.
The New York Post also reported that Iran is now open to returning to negotiations, citing Pakistani sources who suggested its earlier stance was largely strategic posturing aimed at securing stronger terms in any future deal.
However, conflicting reports emerged, with Al Jazeera reporting that Iran’s Foreign Ministry spokesman Esmaeil Baghaei said on Monday that Washington had “violated the ceasefire from the outset”, pointing to the U.S. naval blockade of the Strait of Hormuz and the seizure of an Iranian container ship as breaches of both the truce and international law.
Market volatility increased after Iran reopened the Strait of Hormuz on Friday, triggering a strong rally that pushed the S&P 500 and Nasdaq to record highs for a third consecutive session.
The optimism proved short-lived, however, after Tehran closed the critical shipping route again over the weekend, reigniting concerns over global energy supply disruptions.
Oil markets reacted sharply to the renewed uncertainty. U.S. crude futures rose 6.9% to settle at US$89.61 per barrel, while Brent crude gained 5.6% to $95.48 per barrel.
The CBOE Volatility Index, often referred to as Wall Street’s “fear gauge,” climbed 1.37 points to 18.85 after declining for eight consecutive sessions, briefly reaching a one-week high of 19.99.
Further escalation came after President Donald Trump stated that U.S. forces had seized an Iranian-flagged cargo vessel in the Gulf of Oman. The ship “is under U.S. Treasury Sanctions because of their prior history of illegal activity. We have full custody of the ship, and are seeing what’s on board!” Trump said in a Truth Social post.
In a separate post, Trump warned that the United States could target Iranian infrastructure, including power plants and bridges, if Tehran failed to reach an agreement.
The current ceasefire between the two nations is set to expire later this week, adding to investor uncertainty.
Among individual companies, Netflix shares fell 2.55% and are down approximately 12% since reporting quarterly results and announcing the departure of co-founder Reed Hastings.
Investors are now turning their focus to the ongoing earnings season, assessing the potential impact of geopolitical tensions on corporate performance and economic growth. Key companies including Lockheed Martin and IBM are scheduled to report results later this week, while Tesla is set to kick off earnings from the so-called “Magnificent Seven” technology group on Wednesday.
Early earnings data has so far been broadly supportive. According to FactSet Earnings Insight, in Q1 2026, with 10% of S&P 500 companies reporting, 88% have delivered positive EPS surprises, while 84% have exceeded revenue expectations.
In other corporate news, shares of QXO declined 3.12% after the construction supplies distributor announced a US$17 billion acquisition of building products firm TopBuild. TopBuild shares surged 19.38% on the deal.
In fixed income markets, U.S. Treasury yields moved higher, with the 10-year yield rising to 4.258% and the 2-year yield climbing to 3.727%, reflecting continued reassessment of inflation risks and monetary policy expectations.
