U.S. stocks closed lower on Tuesday, though major indices staged a significant recovery for the second consecutive day, finishing well above their session lows. Former President Donald Trump announced that the U.S. would provide insurance and naval escorts for oil tankers transiting the Strait of Hormuz, prompting a sharp retreat in crude oil prices, the U.S. dollar, and Treasury yields from their peaks. This helped U.S. stock indices pare losses, although the Nasdaq still finished down more than 1%.
At the close, the Dow Jones Industrial Average fell 403.51 points, or 0.83%, to 48,501.27. The Nasdaq Composite dropped 232.17 points, or 1.02%, to 22,516.69. The S&P 500 declined 64.99 points, or 0.94%, to 6,816.63. The U.S. Semiconductor ETF fell nearly 3.8%, leading the decliners among sector-based ETFs. The Nasdaq Golden Dragon China Index closed down 3.34%.
In Europe, the STOXX 600 Index fell 3.08% to 604.44. Germany's DAX 30 Index dropped 3.44% to 23,790.65. France's CAC 40 Index declined 3.46% to 8,103.84. The UK's FTSE 100 Index fell 2.75% to 10,484.13.
In Asia, Japan's Nikkei 225 Index fell 3.06%, South Korea's KOSPI Index dropped 7.24%, and Indonesia's Jakarta Composite Index declined 0.96%.
In cryptocurrencies, Bitcoin fell 0.31% to $68,579, while Ethereum dropped 1.68% to $1,992.50.
In commodities, WTI crude for April delivery rose $3.33, or over 4.67%, to settle at $74.56 per barrel, marking a cumulative gain of nearly 14.34% over three sessions. Brent crude for May delivery gained $3.66, or 4.71%, to settle at $81.40 per barrel.
The U.S. dollar index surged sharply in early trading to its highest level since late November before paring some gains in the afternoon, finishing up approximately 0.6% for the day.
Gold prices plummeted more than 4%, briefly falling below $5,000 during the session. By the New York close, gold was down 4.41% at $5,087.77 per ounce. Silver plunged over 12% at one point, settling down 8.19% at $82.0572 per ounce.
On the macroeconomic front, Donald Trump pledged to ensure the security of shipping in the Gulf. U.S. stocks significantly recovered from their lows after the former President stated that the Navy would escort tankers through the Strait of Hormuz. On his Truth Social platform, Trump wrote, "Effective immediately, I have directed the U.S. International Development Finance Corporation to provide political risk insurance and financial security at reasonable prices for all maritime commerce transiting the Gulf region, particularly energy shipments. If necessary, the U.S. Navy will begin escorting tankers through the Strait of Hormuz as soon as possible. One way or another, America will ensure the free flow of energy to the world."
A Federal Reserve voting member indicated that the shadow of war clouds the economic outlook, suggesting the Fed could remain on hold. Minneapolis Fed President Neel Kashkari, who holds a vote on the FOMC this year, stated that one or two interest rate cuts later this year might be appropriate if inflation cools. However, he noted that the war in the Middle East could create conditions that warrant a prolonged pause. Kashkari reiterated on Monday that he views the current federal funds rate range of 3.5% to 3.75% as close to a "neutral level," neither stimulating nor restraining the economy. He said that before the latest conflict erupted, inflation was gradually declining, suggesting the economy did not require a restrictive policy stance. Prior to the Iran events, the situation seemed to be moving gently in the right direction. Meanwhile, the labor market is stable but slightly softening and is not a source of inflationary pressure.
J.P. Morgan warned that a prolonged closure of the Strait of Hormuz could force Iraq and Kuwait to halt crude oil exports soon. The bank predicted that Iraq and Kuwait would be forced to shut down crude supplies typically exported via the Strait within approximately 3 days and 14 days, respectively. Analysts, including Natasha Kaneva, wrote that by the eighth day of a closure, about 3.3 million barrels per day of crude production would be shut in, increasing to roughly 3.8 million bpd by day 15, and to about 4.7 million bpd by day 18. The estimates apply only to crude oil and exclude refined products. The bank noted this is a conservative estimate and does not include some oil storage in the Persian Gulf or empty vessels that could be rerouted.
Trump announced he would cut off trade with Spain, to which Spain responded that the U.S. must respect bilateral agreements with the EU. President Trump directed Treasury Secretary Scott Bessent to "cut off all trade with Spain" after the country refused U.S. use of its military bases for actions against Iran. The Spanish government responded that the U.S. must respect its bilateral agreement with the European Union. During a meeting with German Chancellor Mertzs at the White House, Trump criticized Spain for its "lack of cooperation" in actions against Iran and declared he would sever all trade between the U.S. and Spain, calling the country "a terrible ally."
Kansas City Fed President Jeffrey Schmid stated that inflation is running too hot and must not be taken lightly. Schmid said on Tuesday that he continues to oppose further interest rate cuts, noting the U.S. labor market is in balance while inflation remains overheated. Schmid pointed out that "inflation has been above the Fed's target for nearly five consecutive years." He emphasized that demand continues to outpace supply, pushing service prices up too rapidly and diverging from the Fed's 2% inflation goal. "We must not be complacent," he stressed. Schmid has long opposed further Fed easing, dissented against two rate cuts last year, and supported the decision last month to hold short-term borrowing costs in the 3.50%-3.75% range.
In corporate news, off-price retail giant Ross Stores reported record fourth-quarter sales and provided annual guidance that exceeded expectations. The company announced strong fiscal fourth-quarter results and projected annual sales above Wall Street forecasts, indicating robust consumer demand for its discounted apparel and accessories despite macroeconomic uncertainty. Additionally, the retailer announced a new share repurchase program of up to $2.55 billion for fiscal 2026 and 2027. Its shares rose approximately 6% in after-hours trading following the news. For the fourth quarter, comparable store sales grew 9%, significantly surpassing analyst estimates of 4.03%. Quarterly earnings per share reached $2.00, beating the consensus estimate of $1.90. Sales hit a record high of $6.64 billion, exceeding expectations of $6.4 billion. Looking ahead, the company expects annual comparable store sales growth between 3% and 4% for the new fiscal year, with the midpoint above the average analyst estimate of 3.05%.
CrowdStrike Holdings, Inc. reported better-than-expected results, demonstrating to investors that the recent AI-powered cybersecurity super-tool from Anthropic does not pose a major threat to the platform-based cybersecurity leader. For the fourth quarter of fiscal 2026, CrowdStrike's total revenue was approximately $1.305 billion, a significant 23% year-over-year increase, surpassing the average analyst estimate of about $1.3 billion. Adjusted earnings per share were $1.12, up 38% year-over-year and above the expected $1.10. As of January 31, 2026, the company's annual recurring revenue grew 24% year-over-year to $5.25 billion.
Target provided fiscal 2026 profit guidance that exceeded expectations and forecast a return to sales growth after three consecutive years of decline, indicating its turnaround plan is gaining traction. The retail giant expects adjusted earnings per share between $7.50 and $8.50 for fiscal 2026. The midpoint of this range, $8.00, is above the analyst consensus of $7.63. The company also projected net sales growth of approximately 2% compared to fiscal 2025, adding that it expects net sales growth in every quarter of the full year.
Apple unveiled a full lineup of updated MacBook models, with the Pro series receiving a significant boost in AI computing power. On the evening of March 3, the company officially launched new MacBook Pro and MacBook Air models equipped with the new M5 series chips, alongside an update to the Studio Display. This marks Apple's largest Mac product update in over a year, with AI computing performance as a core selling point. The update comes at a critical time for Apple's Mac business, which saw holiday quarter sales decline nearly 7% to $8.39 billion, significantly below analyst expectations of nearly $9 billion.
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