Wall Street stocks declined on Tuesday, and oil prices pulled back after U.S. President Donald Trump suggested the Middle East conflict could end soon. The Dow Jones Industrial Average fell 0.5 percent, the S&P 500 dropped 0.4 percent, and the Nasdaq Composite was down 0.1 percent in early trading.
Europe's STOXX 600 index, however, managed to gain 1.65 percent, paring earlier advances. Asia-Pacific shares outside Japan rose approximately 3.27 percent. Oil prices plummeted 7 percent, retreating from a three-year high. Brent futures were last at $91.92 a barrel, and U.S. West Texas Intermediate crude fell to $88.59 a barrel.
Trump's remarks on Monday injected market optimism, contrasting with defiant comments from Iran’s military. Hardliners rallied behind new Supreme Leader Mojtaba Khamenei, stating a blockade of oil exports would continue until U.S. and Israeli attacks cease. Trump warned of stronger U.S. action if exports were blocked. U.S. Defense Secretary Pete Hegseth indicated Tuesday would be the most intense day of strikes against Iran.
"I think the market's initial reaction has been rates higher, dollar stronger, oil higher, discount rates higher all impacting equities to the downside," stated John Belton, a portfolio manager at Gabelli Funds. "I think that's a reasonable initial knee jerk, but we'll see how it unfolds from here."
Steadier investor sentiment triggered a share rebound in Europe and Asia, while government bond yields dipped. Money markets adjusted expectations for European Central Bank rate hikes this year. The yield on the U.S. 10-year Treasury note was down 1.5 basis points at 4.119 percent. Traders pushed back bets on the Federal Reserve's next rate cut, now anticipating it in July.
Gold prices rose around 1.5 percent to $5,212 an ounce, while Bitcoin added 1.3 percent to $69,908.