North American stocks declined on Tuesday, with early gains dissipating as renewed concerns about the Middle East war outweighed early optimism over a round of solid corporate earnings.
The Israeli military said Lebanon’s Iran-aligned Hezbollah had fired several rockets toward its troops operating in southern Lebanon, in what it described as a “blatant violation” of the ceasefire agreement.
Pakistan is awaiting a formal response from Iran to confirm it will send a delegation to attend a second round of peace talks with the U.S. in Islamabad, the country’s Information Minister Attaullah Tarar said on X, with plans for U.S. Vice President JD Vance to travel to the region for talks on hold without Iranian confirmation.
In an interview with CNBC earlier in the day, U.S. President Donald Trump said he does not want to extend the ceasefire with Iran, which is set to expire soon.
Stocks have rallied in recent weeks on the belief that a peace deal was likely in the near future.
“There’s two things going on - what is the resolution going to be or the path going to be for Iran, but in the meantime if that wasn’t there, you’ve got really good expectations for earnings coming in and the companies are pretty much reporting that way, and the economy is doing fine,” said Thomas Martin, senior portfolio manager at GLOBALT Investments in Atlanta.
“The wild card is indeed what happens with Iran, and nobody knows, and it’s baffling to me to think that people think that it’s going to be OK.”
At 2:57 p.m. ET, the S&P/TSX composite index was down 450.97 points, or 1.31 per cent, at 33,909.51
In New York, the Dow Jones Industrial Average fell 167.35 points, or 0.34 per cent, to 49,275.21, the S&P 500 lost 28.10 points, or 0.4 per cent, to 7,081.01 and the Nasdaq Composite lost 69.58 points, or 0.28 per cent, to 24,334.82.
The indexes were in positive territory earlier in the session.
Earlier economic data from the Commerce Department showed U.S. retail sales increased more than expected in March as the war with Iran boosted gasoline prices and led to a record surge in receipts at service stations.
Retail sales jumped 1.7 per cent last month, the largest rise since March 2025, after an upwardly revised 0.7 per cent gain in February and above the 1.4 per cent estimate of economists polled by Reuters.
Optimism around AI and upbeat earnings have cheered investors, with first-quarter growth expectations of around 14 per cent, according to LSEG data.
J.P. Morgan raised its year-end target for the S&P 500, citing AI and tech-driven earnings, while Amazon said on Monday it will invest up to $25 billion in Anthropic, signaling megacap companies are still willing to spend massively on the AI technology. Amazon shares rose 1.2 per cent.
The S&P 500 energy index rose more than 1 per cent as the sole gainer among the major S&P sectors due to another jump in crude prices on Middle East tensions.
UnitedHealth jumped nearly 9 per cent after the healthcare conglomerate raised its annual profit forecast and beat Wall Street expectations for the first quarter, accounting for more than 176 points to the upside for the Dow.
Apple shares also garnered attention, down 2.4 per cent after the company said CEO Tim Cook would hand over the reins to longtime hardware boss John Ternus.
Investors were digesting comments from Kevin Warsh, Trump’s nominee to lead the Federal Reserve, whose confirmation hearing wrapped up in the Senate on Tuesday.
Warsh called for “regime change” at the U.S. central bank that would include a new “framework” for controlling inflation and a possible overhaul of how it communicates with the public about monetary policy.
Republican Senator Thom Tillis has promised to block Warsh’s confirmation until the Department of Justice ends an investigation into current Fed Chair Jerome Powell that Tillis says threatens the central bank’s independence.
The impasse could impact monetary policy, especially as Trump has vowed to fire Powell if he does not leave when his term ends in May.
Reuters and The Associated Press