US stock futures retreated on Tuesday amid dwindling hopes for a quick resolution to Israel-Iran hostilities, as President Trump played down the prospect of a truce and the two continued to trade strikes.
Dow Jones Industrial Average futures (YM=F) sank 0.6%, while those on the S&P 500 (ES=F) fell 0.7%. Contracts on the tech-heavy Nasdaq 100 (NQ=F) tumbled roughly 0.8%.
Overall, US stocks have so far proved resilient amid the conflict. The major gauges ended higher on Monday after a report that Iran is seeking a ceasefire and return to nuclear program negotiations.
But Trump’s overnight call for the evacuation of Iran’s capital city amid a spike in Israel-Iran tensions has spooked markets worried about the risk of a descent into full-on regional war. The president’s early exit from the G7 summit is also spurring fears of an escalation.
Early on Tuesday, Trump rejected the idea he was working on a Middle East pause in strikes, as suggested by France’s President Macron. It “certainly has nothing to do with a Cease Fire. Much bigger than that,” he posted on social media.
Pressed on what he was looking for, Trump said on Air Force One: “An end. A real end, not a ceasefire, an end.” But the president did not provide more detail, including on next steps.
Oil prices jumped as investors weighed the stream of remarks, with Brent futures (BZ=F) rising to over $74 a barrel and West Texas Intermediate (CL=F) crude not far below $73 a barrel.
At the same time, Wall Street is grappling with concerns over Trump’s trade policy and the direction of US interest rates.
As the date for lifting the pause on Trump’s sweeping tariffs approaches, US officials have used the G7 summit to pursue trade deals. The first completed deal emerged Monday, when Trump and British Prime Minister Keir Starmer signed off on the US-UK trade pact agreed in May.
Read more: The latest on Trump’s tariffs
Later in the day, investors will get fresh insight into how retail sales are faring amid tariff uncertainty with the release of May data, due at 8:30 a.m. ET.
Wall Street is also looking to the Federal Reserve’s two-day meeting that starts on Tuesday for clues to whether policymakers still want to cut interest rates twice in 2025, amid signs of cooling inflation. The Fed is expected to hold rates steady in its decision on Wednesday.
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