(Updates with index/price moves, macroeconomic data and company/geopolitical news from the first paragraph.)
US equity indexes fell, with technology leading sectors lower, after crude oil advanced as the Iran geopolitics worsened and the 30-year government bond yield touched levels seen around the 2007 global financial crisis.
The Nasdaq Composite dropped 1.2% to 26,331.2, and the S&P 500 declined 0.6% to 7,702.1 after midday Tuesday. The Dow Jones Industrial Average slipped 0.2% to 53,367.1. Technology, industrials and communication services led decliners. Healthcare, energy, and consumer staples topped gainers.
Most US Treasury yields retreated after midday. The 30-year yield fell 2.5 basis points to 5.29% after touching 5.34% intraday, the highest since 2007.
The increase in the 30-year yield to a 19-year high comes amid concerns that an imminent escalation in the Middle East sent Brent crude prices above $90 a barrel and will fan fears of inflation, according to a D.A. Davidson research note Tuesday.
The front-month US West Texas Intermediate crude oil contract rose 0.7% to $85.06 per barrel, and global benchmark North Sea Brent edged up 0.4% to $91.27 per barrel a day after the deadline to reach a permanent peace deal with Iran expired on Monday.
"There are no talks or conversations going on, or scheduled, with the Islamic Republic of Iran," Trump posted on his social media platform. "The Hormuz Strait is open and operating. All water mines have been removed or detonated."
The Strait of Hormuz will remain closed until the US meets the conditions of an interim deal signed with Iran in June, Reuters reported Tuesday, citing Iran's negotiator Mohammad Baqer Qalibaf in state media. On the same day, Trump posted an image that showed the Strait of Hormuz as "New U.S. Territory."
Hormuz maritime traffic remains at high risk after a vessel was struck by an "unknown projectile," according to media reports citing the UK's maritime agency. The United Arab Emirates said its air defences "detected two ballistic missiles launched from Iran toward the country, with the first falling outside the country's territorial waters, while the second fell within the territorial waters," according to a report from Al Jazeera, a Middle Eastern broadcaster.
Gold futures slipped 1.2% to $4,421.70, and silver futures slumped 3.2% to $64.09.
In economic news, US housing starts plunged 12% sequentially to a seasonally adjusted rate of 1.24 million units last month, the Census Bureau and the Department of Housing and Urban Development said. The consensus was for 1.35 million in a Bloomberg-compiled survey.
Pending home sales fell 2.3% in July, compared with expectations for no change in a Bloomberg-compiled survey and a 4.8% drop in June, according to the National Association of Realtors.
US industrial production rose by 0.2% in July, compared with expectations for a 0.3% gain in a Bloomberg-compiled poll, and an upwardly revised 0.3% increase in June.
In company news, ExxonMobil (XOM) remains committed to growing Permian volumes, with a new 20-year integrated midstream agreement with Targa Resources (TRGP) supporting its long-term growth targets, UBS Securities said in a note Monday. Shares of Targa jumped 7.3%, the top gainer on the S&P 500.