Dow Jones Slides as Iran Peace Talks Wobble — Here’s What Wall Street Is Actually Watching

On Wall Street, Tuesday had the distinct feel of a day when no one was entirely sure what to do with themselves. Rising oil prices, geopolitical anxiety, and the ongoing uncertainty about whether the U.S.-Iran ceasefire would last past Wednesday all contributed to the Dow Jones’s decline during the remainder of the trading session after it had opened firmly in positive territory, up roughly 270 points in the first few minutes of trading. By mid-afternoon, the index was in the range of 49,100 to 49,250, down between 0.4 and 0.7 percent, depending on when you checked. Not a breakdown. But it’s also uncomfortable.

Oil was the immediate catalyst. Following reports that Vice President JD Vance’s trip to Pakistan for talks with Iran had been postponed, West Texas Intermediate crude reversed course from recent declines and surged back above $92 a barrel, a gain of about 2.8 percent in a single session. Tehran has not promised to send a delegation, according to reports from Axios and the New York Times, casting serious doubt on whether the ceasefire, which is scheduled to expire on Wednesday, will last or be prolonged. In the morning, President Trump told CNBC that while he anticipated a lot, the U.S. military was ready to take action if the deadline passed without a deal. Both aspects of that message were heard by markets.

Watching the tape on days like these gives the impression that the market has been attempting to price in an optimistic scenario, such as peace, reduced oil prices, or a return to something like supply chain stability, while also hedging against the possibility that the optimistic scenario won’t come to pass. As a result, the market reacts swiftly to news stories and reverses them almost as quickly. After the S&P 500 closed above 7,100 for the first time ever on optimism over peace talks, the Nasdaq just ended a thirteen-day winning streak on Monday, its longest since 1992. The session on Tuesday was like the morning after a party, when everyone was a little less certain that the good news was genuine.

Not everything was bad. In one of the most dramatic single-session movements for a Dow component in recent memory, shares of UnitedHealth increased more than 7% after the company reported first-quarter earnings that were significantly higher than anticipated. The health insurer increased its full-year outlook and earned $7.23 per share, which was higher than expectations that were closer to $6.57. By itself, that prevented further declines in the index. Following the announcement of an increased investment commitment of up to $25 billion in Anthropic, Amazon’s stock increased by more than 1%. A few other names persisted. Several analysts pointed out during the session that the earnings picture is still genuinely strong, with the S&P 500’s first-quarter growth tracking in the double digits. If the geopolitical overhang weren’t so severe, the market as a whole might be pushing even higher.

Kevin Warsh, the nominee for chair of the Federal Reserve, made an appearance before the Senate Banking Committee for confirmation hearings, which attracted a lot of attention. Jerome Powell will eventually be replaced by Warsh, a former Fed governor with a complicated financial disclosure and a reputation for supporting tighter policy. However, Tuesday’s session treated the hearings as something to observe rather than a pivotal moment. During the session, the 10-year Treasury yield increased to more than 4.3 percent. This figure has implications for stocks, especially growth names that are susceptible to rate expectations.

It’s difficult to tell, based on Tuesday’s close, if the market is pausing before continuing its recent upward trend or if the geopolitical risk is significant enough to cause a significant decline in the near future. That story will be swiftly revealed when the ceasefire expires on Wednesday. Oil retreats and the Dow most likely recovers if a deal comes through. If negotiations break down, things become much more difficult. As we wait to see which version of Wednesday actually materializes, the Dow is currently sitting about two percent below its 52-week high, retaining the majority of its gains from an incredible run.