US equity indexes declined on Tuesday as a slide in semiconductors hit technology, while worsening Middle East geopolitics boosted crude oil prices.
The Nasdaq Composite dropped 0.9% to 24,663.80, and the S&P 500 slid 0.5% to 7,138.80, retreating from recent record highs as the so-called artificial intelligence-trade wobbled. The Dow Jones Industrial Average slipped by almost 0.1% to 49,141.93.
Microsoft-backed (MSFT) OpenAI recently missed its own targets for new users and revenue, The Wall Street Journal reported late Monday, citing people familiar with the matter. Chief Financial Officer Sarah Friar expressed concern that OpenAI may not be able to pay for future computing contracts if sales fail to grow fast enough, the news report said, citing the people.
Among companies with a market capitalization of more than $200 billion, the worst performers were largely semiconductor names, including Arm Holdings (ARM), Applied Materials (AMAT), Arista Networks (ANET), Broadcom (AVGO), and Oracle (ORCL), according to data compiled by Finviz.
Meanwhile, the United Arab Emirates will leave the Organization of the Petroleum Exporting Countries and its more expanded version, OPEC+, effective May 1, the Emirates News Agency reported.
This comes as Iran's latest proposal to end the war in the Middle East has left US President Donald Trump unhappy with the offer, leaving the deadly conflict in a continuing state of deadlock, Reuters reported Tuesday, citing an unnamed US official.
Iran's offer included a reopening of the Strait of Hormuz in return for lifting the US blockade of Tehran's ports and deferring talks over its nuclear program. This comes as weekend talks expected to be held in Pakistan between Iran and the US failed to materialize.
"Alarm bells will ring loudly if the [Strait of Hormuz] doesn't reopen during May," Bjarne Schieldrop, chief analyst of commodities at SEB Research, said in a note. "Spot crude and product prices will trade higher and higher. And if a decent reopening doesn't take place before June/July, then the risk is significant for a real crisis where the world may be forced to reduce its oil consumption closer to the level of availability."
West Texas Intermediate crude oil futures jumped 3.7% to $99.96, and Brent crude futures advanced 2.7% to $111.16.
In precious metals, gold futures dropped 1.8% to $4,608.7, and silver futures slumped 2.6% to $73.05, as higher crude oil prices raised inflation concerns.
Most US Treasury yields rose, with the 10-year steady at 4.34% and the two-year climbed 2.3 basis points to 3.83%.
In economic news, the Conference Board's measure of consumer confidence rose to 92.8 in April from an upwardly revised 92.2 reading in March, compared with a decrease to 89.0 expected in a Bloomberg-compiled poll. The survey was conducted from April 1 to April 22, which included the temporary two-week Iran ceasefire.
The Richmond Fed's monthly manufacturing index rose to 3 in April from 0 in March, above expectations for 1 in a Bloomberg-compiled survey.
The Case-Shiller National Home Price Index rose by 0.3% in February before seasonal adjustment, following a 0.2% decrease in January.