US stock futures declined Tuesday as tensions escalated between Israel and Iran, with investors worried about the conflict and uncertain US trade policies and interest rates. Dow futures fell 0.7%, S&P 500 futures dropped 0.6%, and Nasdaq 100 futures also lost 0.6%.
The market’s focus remains on whether the Israel-Iran hostilities will end soon. However, former President Donald Trump’s call for the evacuation of Tehran and Israel’s vow to continue attacks have raised doubts about a quick ceasefire.
Trump dismissed reports that he left the G7 summit early to work on peace talks, saying his return to Washington was for a “much bigger” reason.
Despite the conflict, US stocks showed resilience on Monday, rising after reports that Iran sought a ceasefire and a return to nuclear negotiations. Yet, the ongoing violence and Trump’s warnings have increased market uncertainty.
Meanwhile, concerns persist about US trade policy and interest rates. The Trump administration is negotiating trade deals with key partners at the G7 summit, with a new agreement signed with the UK.
However, tariff tensions have hurt retail sales and consumer confidence. Investors await the May retail sales report for insight into the economy.
The Federal Reserve is expected to keep interest rates steady on Wednesday. Policymakers remain cautious about cutting rates due to inflation risks linked to tariffs, despite signs of cooling inflation.
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