Renewed Israel-Iran Concerns May Lead To Pullback On Wall Street

The major U.S. index futures are currently pointing to a lower open on Tuesday, with stocks likely to move back to the downside following the rebound seen in the previous session.

Traders may look to cash in on yesterday’s strong gains amid renewed concerns about the ongoing clash between Israel and Iran.

While reports hinting at an end to hostilities contributed to a rally on Monday, news that President Donald Trump left a G7 summit early to focus on the conflict has led to worries about further escalation.

In a post on Truth Social. Trump said French President Emmanuel Macron mistakenly said he left the summit in order to work on a cease fire between Israel and Iran.

“He has no idea why I am now on my way to Washington, but it certainly has nothing to do with a Cease Fire,” Trump said. “Much bigger than that.”

The downward momentum on Wall Street also comes following the release of a Commerce Department report showing U.S. retail sales fell by more than expected in the month of May.

The Commerce Department said retail sales slid by 0.9 percent in May after edging down by a revised 0.1 percent in April.

Economists had expected retail sales to decline by 0.6 percent compared to the 0.1 percent uptick originally reported for the previous month.

Excluding a steep drop in sales by motor vehicle and parts dealers, retail sales fell by 0.3 percent in May after coming in unchanged in April. Ex-auto sales were expected to inch up by 0.1 percent.

After moving sharply higher early in the session, stocks gave back some ground over the course of the trading day on Monday but continued to turn in a strong performance. With the upward move, the markets largely offset the steep losses seen during Friday’s session.

The major averages all ended the day firmly in positive territory, with the tech-heavy Nasdaq posting a standout gain. The Nasdaq jumped 294.39 points or 1.5 percent to 19,701.21, the S&P 500 advanced 56.14 points or 0.9 percent to 6,033.11 and the Dow climbed 317.30 points or 0.8 percent at 42,515.09.

The early rally on Wall Street came as traders looked to pick up stocks at somewhat reduced levels following the previous session’s nosedive, which came after Israel launched a series of airstrikes against Iran.

While the clash between Israel and Iran continued over the weekend, traders appear optimistic the conflict will remain relatively contained.

A report from the Wall Street Journal citing Middle Eastern and European officials said Iran has been urgently signaling that it seeks an end to hostilities and resumption of talks over its nuclear programs.

“Despite a weekend of violence between the two countries, investors showed no signs of panicking, judging by movements in financial markets on Monday,” said Russ Mould, investment director at AJ Bell.

However, he added, “The Middle East conflict remains a fluid situation and there is the potential for markets to still experience sudden jolts if the tension escalates further.”

The rebound on Wall Street also came as traders looked ahead to a meeting of major world leaders at the G7 summit in the Canadian Rockies later this week.

Traders will be looking to the meeting for signs of progress on trade deals ahead of the end of President Donald Trump’s 90-day pause on “reciprocal tariffs” early next month.

The Federal Reserve’s latest monetary policy announcement is also likely to attract attention from traders in the coming days.

While the central bank is widely expected to leave interest rates unchanged, the accompanying statement and Fed officials’ latest projections may provide more clarity about the outlook for rates.
Airline stocks showed a substantial move back to the upside after moving sharply lower over the past few sessions, with the NYSE Arca Airline Index soaring by 3.3 percent.

Significant strength was also visible among semiconductor stocks, as reflected by the 3.0 percent surge by the Philadelphia Semiconductor Index.

Computer hardware, financial and telecom stocks also considerable strength, while pharmaceutical and oil service stocks bucked the uptrend.

Commodity, Currency Markets

Crude oil futures are surging $1.17 to $72.94 a barrel after slumping $1.21 to $71.77 a barrel on Monday. Meanwhile, after tumbling $35.50 to $3,417.30 an ounce in the previous session, gold futures are slipping $7.80 to $3,409.50 an ounce.

On the currency front, the U.S. dollar is trading at 144.77 yen compared to the 144.75 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar unchanged compared to yesterday’s $1.1561.

Asia

Asian stocks ended on a muted note Tuesday as the Israel-Iran war continued to dominate risk markets.

A cautious undertone prevailed after U.S. President Donald Trump left the G7 summit in Canada a day early amid the escalating conflict in the Middle East.

As Israel and Iran attacked each for a fifth straight day, Trump urged residents of Iran’s capital, Tehran, to evacuate in a social media post, warning once again that Iran must not be allowed to develop nuclear weapons.

The Japanese yen recovered some ground after the Bank of Japan left interest rates unchanged and announced that it would decelerate the reduction of its government bond purchases beginning in April 2026.

Gold held steady while oil prices rose about 1 percent on fears that further escalation in Middle East tensions could trigger a broader regional conflict.

China’s Shanghai Composite Index fluctuated before finishing marginally lower at 3,387.40. Hong Kong’s Hang Seng Index fell 0.3 percent to 23,980.30, dragged down by tech and EV stocks.

Japanese markets bucked the weak regional trend to hit a four-month high as BoJ Governor Kazuo Ueda warned against quick bond tapering.

The Nikkei 225 Index rose 0.6 percent to 38,536.74, led by banks and chip-related stocks. The broader Topix Index settled 0.4 percent higher at 2,786.95. Disco Corp surged 6.3 percent, Tokyo Electron climbed 2.9 percent and Advantest added 2.4 percent.

Seoul stocks ended on a flat note, with the Kospi closing up 0.1 percent at 2,950.30, thanks to gains in tech, auto and shipbuilding stocks. Samsung Electronics rose 1.6 percent, Hyundai Motor gained 1.7 percent and Hanwha Ocean soared 7.9 percent.

Australian markets ended marginally lower, giving up early gains.

St Barbara shares plunged 14.5 percent after the gold miner with operations in Canada and Papua New Guinea downgraded its full year gold production guidance and projected higher all-in sustaining cost for the year.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index dropped 0.4 percent to 12,639.35.

Europe

European stocks have moved lower on Tuesday after U.S. President Donald Trump urged residents of Tehran to “immediately evacuate,” signaling a potential escalation of the conflict.

In addition, Israel’s military claimed today it had killed Ali Shadmani, who it identified as Iran’s wartime chief of staff and said was the most senior military commander.

The German DAX Index is down by 0.8 percent, the French CAC 40 Index is down by 0.6 percent and the U.K.’s FTSE 100 Index is down by 0.3 percent.

RWS Holdings surged 6.5 percent after the content solutions company unveiled a new growth strategy, focusing on growth, technology integration, and AI solutions.

Online fashion retailer ASOS declined 1.1 percent after replacing its finance chief.

Informa, which specializes in organizing events and publishing books, added nearly 2 percent after backing its full-year guidance.

Oil & gas giant BP Plc jumped 2.2 percent and Shell rose 1.2 percent as oil prices rose sharply, reversing Monday’s brief decline.

U.S. Economic News

The Commerce Department released a report on Tuesday showing U.S. retail sales decreased by more than expected in the month of May.

The report said retail sales slid by 0.9 percent in May after edging down by a revised 0.1 percent in April.

Economists had expected retail sales to decline by 0.6 percent compared to the 0.1 percent uptick originally reported for the previous month.

Excluding a steep drop in sales by motor vehicle and parts dealers, retail sales fell by 0.3 percent in May after coming in unchanged in April. Ex-auto sales were expected to inch up by 0.1 percent.

At 9:15 am ET, the Federal Reserve is scheduled to release its repot on industrial production in the month of May. Industrial production is expected to inch up by 0.1 percent in May after coming in unchanged in April.

The Treasury Department is due to release its report on homebuilder confidence in the month of June at 10 am ET. The housing market index is expected to rise to 36 in June after tumbling to 34 in May.

Also at 10 am ET, the Commerce Department is scheduled to release its report on business inventories in the month of April. Business inventories are expected to come in unchanged in April after edging up by 0.1 percent in March.