U.S. stock index futures were lower on Tuesday evening after renewed military action involving Iran undermined hopes for a nearby peace deal and left markets focusing on forthcoming inflation data.
By 19:10 ET (23:10 GMT), S&P 500 Futures had fallen 0.2% to 7,373.75 points, Nasdaq 100 Futures were down 0.2% at 29,058.50 points, and Dow Jones Futures dropped 0.3% to 50,759.0 points.
Geopolitical developments cloud earlier optimism
Hopes for a U.S.-Iran peace arrangement dimmed after U.S. forces said they launched fresh strikes against Iran in response to the downing of an Apache attack helicopter on Monday night. Central Command characterized the strikes as conducted in "self-defense" and a response to what it described as "unjustified Iranian aggression." Media reports indicated the U.S. carried out a second wave of attacks on Tuesday evening.
The latest military action stood in contrast to comments made on Monday by President Donald Trump, who again said a peace deal with Iran was near and said the U.S. was prepared to declare "total victory" over the country in two weeks. Markets had briefly clung to hopes after Iran and Israel agreed to halt strikes against each other earlier this week at the president's request, but the new round of aggression suggested little concrete progress in negotiations.
Wall Street reaction - tech rebound stalls
Major U.S. equity benchmarks moved unevenly in cash trading. The S&P 500 fell 0.3%, the NASDAQ Composite slid nearly 1%, while the Dow Jones Industrial Average rose 0.2%.
Technology names, particularly chipmakers that had been recovering from last week's severe losses, saw that rebound lose force. The chip sector remained under pressure as doubts about longer-term returns from artificial intelligence triggered profit-taking in a group that had rallied earlier. That sector-wide retrenchment contributed to broader weakness on the NASDAQ.
Among individual movers, server maker Super Micro Computer (NASDAQ:SMCI) tumbled more than 9% in aftermarket trading after the company said it plans to raise $7 billion in equity-related sales to help cover costs tied to new hardware purchases.
Investor positioning and economic data ahead
Investors were observed rotating into more economically sensitive areas of the market as concerns grew that the Federal Reserve could raise interest rates to counter inflation driven in part by rising energy costs. That shift reflected a heavier focus on sectors tied to cyclical growth rather than on high-multiple technology names.
All eyes were on U.S. consumer price index inflation data for May, due on Wednesday morning. The data is likely to influence market expectations for interest rates later this year. Current forecasts, as reflected in market commentary, expected both headline CPI and core CPI to remain elevated after sharp increases in March and April, with rising oil and gas prices cited as a key factor behind increased living costs.
What to watch next
- Market reaction to the May CPI reading, which could shift expectations for Federal Reserve policy and investor positioning across sectors.
- Any further Iranian retaliation following Tuesday's strikes, and how that might affect risk sentiment and energy markets.
- Price action in chipmakers and other technology stocks as investors reassess returns tied to AI and hardware spending.
Given the interplay of geopolitical risk, inflation dynamics, and sector rotation, short-term market direction remained sensitive to both economic data and developments on the Iran front.