New York stocks, which posted their biggest monthly gain in six years last month, declined amid growing instability in the Middle East.
The Dow Jones Industrial Average closed at 48,941.90 on Tuesday, down 557.37 points, or 1.13%, from the previous session. The S&P 500 fell 29.35 points, or 0.41%, to 7,200.77, while the tech-heavy Nasdaq Composite dropped 46.64 points, or 0.19%, to 25,067.80.
The decline ended a run of record highs that had continued through last week, as tensions in the Middle East came to the forefront. Amid an ongoing standoff between the United States and Iran over the Strait of Hormuz, news emerged that energy facilities in the United Arab Emirates (UAE) had been attacked. The United States and Iran have continued military activities near the Strait of Hormuz, heightening tensions.
News of an explosion involving a Korea-linked vessel anchored in the Strait of Hormuz also weighed on sentiment, while energy-related stocks advanced.
Against this backdrop, international oil prices surged. Brent crude futures for July delivery jumped 5.80% to close at $114.44 a barrel. West Texas Intermediate (WTI) crude futures for June delivery also rose 4.39% to settle at $106.42 a barrel.
Treasury yields climbed as inflation concerns mounted. The 30-year U.S. Treasury yield rose 6 basis points (1 bp = 0.01 percentage point) to 5.03%, while the 10-year Treasury yield gained 7 basis points to 4.45%.
"The explosion on a Korean merchant vessel could signal that commercial ships remain unsafe even after President Donald Trump announced plans for the U.S. Navy to keep the strait open," Reuters noted.
