Major United States benchmark averages closed slightly lower on Monday (Tuesday AEST) as investors became less optimistic about a deal to reopen the Strait of Hormuz.
The Dow Jones Industrial Average fell 61 points, or 0.1%, to 53,976.0. The S&P 500 declined 4.5 points, or 0.1%, to 7,753.1, while the Nasdaq dropped 85.3 points, or 0.3%, to 26,605.4.
U.S. President Donald Trump demanded that Iran pay compensation for people he said had been killed in wars, attacks and protests.
Iran earlier called on Washington to meet conditions including compensation for damage caused since the U.S. and Israel launched strikes on its territory more than five months ago.
U.S. crude oil prices reflected renewed pessimism about the reopening of the Strait, settling 5.1% higher at US$82.13 per barrel.
Reopening oil flows through the Strait could ease concerns over elevated energy prices that have fuelled inflation worries and raised fears that central banks may need to increase interest rates.
Intel shares fell 4.1% after the chipmaker said it planned to raise $15 billion through a share sale.
Nvidia shares also declined 2.9% after a person familiar with the matter told Reuters that a group of financial firms, including Apollo Global and Blackstone, was working with Nvidia on a $500 billion funding package for AI infrastructure development.
Meanwhile, data released on Friday showing that U.S. employers unexpectedly shed 23,000 jobs in July prompted traders to reduce expectations of a Federal Reserve interest-rate hike in September.
Traders now price in a 51% chance of a September rate hike, according to the CME Group FedWatch Tool.
More quarterly results are due, including reports from semiconductor company Applied Materials and networking equipment maker Cisco.
On the bond markets, 10-year and 2-year rates rose 1.2% and 1.1% to 4.705% and 4.243%, respectively.
