Stocks finished lower on Tuesday, as investors continued to weigh escalating geopolitical tensions in the Middle East. The Dow fell 119 points, while the S&P 500 dipped 0.3%. The Nasdaq Composite was down less than 0.1%.
Risk sentiment has been pressured in the aftermath of the U.S. killing a key Iranian military leader last week. Tehran subsequently ramped up retaliatory rhetoric, while Washington issued a warning of its own. Treasuries declined despite the geopolitical concerns, with the yield on the 10-year note up two basis points to 1.82%. In commodities, WTI crude slid 0.9% to $62.70/barrel. COMEX gold rose 0.3% to $1,573.50/ounce.
All 11 S&P 500 sectors closed in negative territory, with Real Estate, Consumer Staples, and Financials all losing more than 0.6%. Chipmakers outperformed, with the Philadelphia Semiconductor Index climbing 1.8%. Microchip Technology rallied 6.7% after increasing its most recent quarterly guidance, suggesting the December quarter represented the bottom of the current semi-cycle. Meanwhile, Micron Technology and Western Digital Corp. jumped 8.8% and 6.8%, respectively, following analyst upgrades.
In other corporate news, Apache Corp. surged 26.8%, its largest jump in almost 50 years, after the oil and gas company reported a “significant oil discovery” off the coast of South America. Elsewhere, Goldman Sachs advanced 0.7% after announcing a reorganization to its reporting structure in order to increase transparency.
On the data front, an update from the Institute for Supply Management (ISM) showed the services sector expanded at a faster-than-anticipated pace in December. Separately, the U.S. trade deficit narrowed to a three-year low in November.