US stocks end lower amid Iran war, Trump's Hormuz protection pledge

By Mucahithan Avcioglu

ISTANBUL (AA) – US stocks ended with losses Tuesday amid concerns over the ongoing conflict in the Middle East.

The Dow Jones Industrial Average dropped by 0.83%, or 403.51 points, to close at 48,501.27.

The Nasdaq fell by 1.02%, or 232.17 points, to 22,516.69, while the S&P 500 slid 0.94%, or 64.99 points, to 6,816.63.

The Volatility Index (VIX), also known as the "fear index," rose by 9.93% to 23.57 points.

Stocks traded lower amid concerns that the conflict in the Middle East could disrupt global trade and reignite inflationary pressures.

As US and Israeli strikes against Iran launched over the weekend continued and Tehran pressed ahead with retaliatory attacks, oil prices extended their gains on mounting supply concerns. Iranian authorities announced that they had closed the Strait of Hormuz to transit traffic and would target any vessels attempting to pass through the strategic waterway.

US President Donald Trump said he had instructed officials to provide political risk insurance and financial guarantees at a reasonable cost to secure maritime trade passing through the Gulf, particularly energy shipments. He added that the US Navy would begin escorting tankers through the Strait of Hormuz if necessary.

Trump stressed that the United States would ensure the “free flow of energy to the world” under any circumstances.

Although the rally in oil prices eased following Trump’s remarks, gains remained strong. Brent crude was up more than 5% at $81.70 per barrel, while West Texas Intermediate (WTI) crude rose over 4% to $74.50 per barrel.

Analysts warned that higher energy prices could fuel inflation and further complicate policy decisions for the US Federal Reserve, which is already cautious about tariff-driven price pressures.

Investors are closely monitoring comments from Fed officials for further clues on the policy outlook.

Minneapolis Fed President Neel Kashkari said it was too early to assess the inflationary impact of the Middle East conflict, noting that monetary policy was currently in a pretty good place.

New York Fed President John Williams said that additional rate cuts would eventually be necessary if inflation continues to ease. Kansas City Fed President Jeff Schmid cautioned that inflation has remained above the central bank’s target for nearly five years and stressed that policymakers have little room for complacency.

Meanwhile, OpenAI said Tuesday that it is revising a recently announced agreement to supply artificial intelligence tools to the Pentagon after criticism that the deal was rushed and raised concerns over potential domestic surveillance, also causing a flurry of subscription cancellations from ChatGPT users.

“We shouldn’t have rushed to get this out,” CEO Sam Altman wrote in a message later reposted on the US social media company X’s platform, adding that the issues surrounding military AI use are “super complex” and require clearer communication.