(Recasts with preliminary close of trading, adds analyst comment)
* U.S. crude settles down over 11%
* Iran threatens continued oil blockade
* U.S. Navy says oil tanker escorted through Strait of Hormuz
By Stephen Culp and Johann M Cherian
NEW YORK, March 10 (Reuters) – U.S. stocks lost steam on Tuesday, giving up early gains to skid into negative territory as investors weighed fading hopes for an earlier-than-expected end to the U.S.-Israeli war on Iran against a backdrop of renewed military threats and ongoing worries of economic stagflation.
All three major U.S. stock indexes closed lower to mixed to snap an earlier rally, as U.S. President Donald Trump reacted to reports that Iran was deploying mines in the crucial Strait of Hormuz with threats of retaliation and renewed calls for Iran’s total surrender.
“The market was showing some strength and it has given all that back,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York. “There’s a lot of confusion among investors.”
“You see these headlines coming out of the White House that give the market hope, and then clearer heads prevail and markets realize this is nowhere near over,” Ghriskey added. The indexes wavered through early-session trepidation as U.S. Defense Secretary Pete Hegseth warned that Tuesday would be the most intense day thus far of strikes against Iran.
The conflict has sparked a jump in crude prices, which has fueled worries over inflation against a backdrop of a weakening labor market – a toxic combination of rising costs and a softening economy called stagflation. But the market remained hopeful that a near-term resolution could be reached, despite an announcement by Iran’s Revolutionary Guards that the country would not allow any oil to leave the Middle East until U.S.-Israeli attacks ceased, which prompted threats from Trump that he would strike back “20 times harder” if they blocked crude exports. In addition to Trump’s prediction of a prompt de-escalation of the Iran war, his administration indicated a potential willingness to end oil sanctions against Russia, which eased upward pressure on oil prices, while also raising the possibility of progress toward ending Russia’s war on Ukraine. Energy Secretary Chris Wright announced on Tuesday that the U.S. Navy had successfully escorted an oil tanker through the Strait of Hormuz and offered assurances that oil continues to move to the global marketplace.
U.S. and Brent front-month crude futures settled down over 11%.
“When you see that type of a parabolic move, whether it’s in gold or oil or anything else, you tend to get a pretty violent reversal as soon as you get some news on the other side,” said Paul Nolte, senior wealth adviser and market strategist at Murphy & Sylvest in Elmhurst, Illinois.
According to preliminary data, the S&P 500 lost 14.44 points, or 0.21%, to end at 6,781.55 points, while the Nasdaq Composite gained 2.24 points, or 0.01%, to 22,698.19. The Dow Jones Industrial Average fell 36.66 points, or 0.08%, to 47,704.14.
Chipmakers were higher on Tuesday, with Nvidia, SanDisk and Western Digital posting solid gains.
The S&P Software & Select Services index, battered in recent months over fears of artificial intelligence-related disruption, was once again the clear underperformer.
Health insurer Centene plunged after it reaffirmed its 2026 profit forecast.
Results from enterprise software maker Oracle are expected shortly, and could offer insight into corporate expenditures on AI.
Economic data expected later this week has the potential to move markets. This includes the Labor Department’s Consumer Price Index, the Commerce Department’s second take on fourth-quarter GDP and its broad Personal Consumption Expenditures report.
(Reporting by Stephen Culp in New York; Additional reporting by Johann M Cherian and Utkarsh Tushar Hathi in Bengaluru; Editing by Matthew Lewis)
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