Stocks Slip Again as Oil Prices Swing on Iran War Fears

U.S. stocks slipped further from their record highs on Tuesday as oil prices swung wildly amid uncertainty over when the war between Israel and Iran will allow crude to flow freely again.

The S&P 500 fell 0.3% for its second modest drop since setting an all-time high on Friday. The Dow Jones Industrial Average dipped 184 points, or 0.3%, to 53,791.85, and the Nasdaq composite sank 0.6% to 26,445.45.

Oil markets saw sharper moves. Brent crude briefly jumped above $90 a barrel in the morning before falling back below $87, eventually settling at $88.91, up 1.4% from Monday. Such volatility has become common since the United States and Israel attacked Iran in late February, a conflict that closed the Strait of Hormuz and trapped much of the world's oil in the Middle East. Last month alone, Brent's price ranged between $72 and $102 a barrel.

Higher oil prices are pushing up inflation and have driven the average price of a gallon of regular gasoline to $4.01, according to AAA — up from less than $3.14 a year ago, though down from nearly $4.09 last week.

Wall Street is now focused on Wednesday's release of the latest monthly inflation reading. Economists expect it to show inflation decelerated slightly to 3.4% in July from 3.5% in June.

Traders see a coin flip's chance that the Federal Reserve will raise its main interest rate at its September meeting, according to CME Group data — which would be the first increase in more than three years and could anger President Donald Trump, who has pushed for lower rates.

Treasury yields have climbed since the war began due to higher oil prices and inflation worries, pushing long-term mortgage rates to their highest levels in a year. The 10-year Treasury yield eased to 4.69% Tuesday from 4.72% Monday, but remains well above its pre-war level of 3.97%.

On Wall Street, On Holding dropped 20.3% despite beating profit expectations, after issuing a weaker-than-expected revenue forecast. Aramark rallied 8.5% on stronger-than-expected profit and revenue, while Cardinal Health added 1.3%. Indexes were mixed in Europe and Asia, with Hong Kong's Hang Seng falling 1.1%.