(Updates with latest market prices and developments.)
US benchmark equity indexes were higher intraday, while oil prices dropped as investors tracked Washington's new economic sanctions on Iran and a worsening trade conflict with Canada.
The technology-heavy Nasdaq Composite was up 0.5% at 26,118.8 after midday Tuesday, while the S&P 500 rose 0.2% to 7,668.7. The Dow Jones Industrial Average edged up 0.1% to 53,484.3. Among sectors, tech paced the gainers, while consumer staples led the laggards.
West Texas Intermediate crude oil fell 3.2% to $82.31 a barrel, while Brent dropped 3.7% to $88.81.
On Monday, the US Treasury Department launched an economic campaign to cut off financial channels that support Iran. Countries doing business with Tehran will be given deadlines to shut down Iran-related activities, while entities aiding money laundering or sanctions evasion on behalf of Iran could be cut off from the US financial system.
Iran vowed to retaliate and expressed confidence that its major trading partners will resist Washington's pressure campaign, according to CNBC. China, Russia, India, Pakistan, Qatar and Turkey, among others, still trade with Tehran, Axios reported Monday.
China has warned that the new US sanctions on Iran "will only further intensify tensions" and that Beijing's cooperation with Tehran should not be disrupted, CNN reported Tuesday.
"The market seems largely unfazed by Washington's push for tighter economic pressure on Iran, with traders treating the US effort to nudge partners away from Iranian trade as marginal rather than market-moving," ING Bank said in a report.
Canada unveiled retaliatory tariffs against Washington, matching "dollar for dollar" the 50% duties recently imposed by US President Donald Trump, news outlets reported Tuesday. Canada's new tariffs reportedly cover more than 700 US goods and are worth roughly $20 billion.
Trade talks between the US and Canada collapsed late last week.
US Treasury yields were lower intraday Tuesday, with the 10-year yield down 5.9 basis points at 4.65% and the two-year yield falling 2.8 basis points to 4.21%. Yields on long-term maturities also eased.
In economic news, US consumer confidence fell in August amid a decline in the expectations index, with a "more pessimistic" outlook for business conditions and the labor market ahead, the Conference Board said.
The Federal Reserve may have to tighten its monetary policy soon, unless inflation continues to cool, Boston Fed President Susan Collins said.
"Given the many possible scenarios, policy will need to be nimble," she said. "Should evidence of sustained inflation progress not materialize, I believe it will be appropriate to tighten policy soon to ensure we deliver price stability in a reasonable time frame."
Markets are currently pricing in a 60% probability that the Fed will keep its benchmark rate steady in September, with the remaining odds in favor of a 25-basis-point hike, according to the CME FedWatch tool.
In company news, Dick's Sporting Goods (DKS) shares sank 29% intraday. The athletic goods retailer lowered its full-year outlook amid a challenging athletic footwear and apparel marketplace, while its fiscal second-quarter results fell short of market estimates.
McKesson (MCK) agreed to acquire Precision Medicine in a transaction worth roughly $2.25 billion as part of the drug distributor's efforts to strengthen its clinical research and commercialization services. McKesson shares were up 2.3%.
Intuit (INTU) is among the companies that are scheduled to report their latest quarterly financial results after the closing bell Tuesday.
Spot gold was down 0.3 at $4,640.49 per troy ounce, while silver edged up 0.1% to $69.43 per ounce.
