U.S. stock markets closed lower on Tuesday following concerns about the continuation of the AI trade. Moreover, the lack of initiatives for a permanent solution to the ongoing war and geopolitical conflicts in the Middle East also dampened market participants’ sentiments. All three major stock indexes ended in negative territory.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) fell 0.1% to close at 49,141.93 after a choppy session. At intraday high, the blue-chip index was up more than 213 points. Notably, 14 components of the 30-stock index ended in positive territory while 15 ended in negative territory and one remained unchanged. 

The tech-heavy Nasdaq Composite finished at 24,663.80, sliding 0.9% or 223.30 points due to the weak performance by AI semiconductor bigwigs. The major loser of the tech-laden index was Arm Holdings plc (ARM Quick QuoteARM - Free Report) . The stock price of the British AI chipset designer tumbled 8%. Arm Holdings currently carries a Zacks Rank #3 (Hold).   You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The S&P 500 declined 0.5% to finish at 7,138.80. Six out of 11 sectors of the broad-market index ended in negative territory while five ended in positive territory. The Consumer Staples Select Sector SPDR (XLP) fell 1.1% while the Financials Select Sector SPDR (XLF) rose 0.8%, respectively. 

The fear gauge CBOE Volatility Index (VIX) was down 1.1% to 17.83. A total of 15.48 billion shares were traded on Tuesday, lower than the last 20-session average of 18.11 billion. Decliners outnumbered advancers on the NYSE by a 1.66-to-1 ratio. On the Nasdaq, a 1.76-to-1 ratio favored declining issues.

AI Trade Concerns

The Wall Street Journal reported that privately held Open AI recently posted revenue and new user growth below its own estimates. The Journal also reported that CFO Sarah Friar remained concerned that the company should expand its revenues as soon as possible failing which it may not be able to pay computing contracts.

Following the report, investors once again became shaky about the flourishing AI trade. This resulted in profit-taking on AI semiconductor behemoths. Market participants are waiting for the first-quarter earnings results of five “Magnificent 7” stocks this week. These figures and guidance will provide a more comprehensive view of the health of the AI space.

Indecision on the Middle East War

Market participants were clueless about the ongoing Middle East war. The proposed second round of peace talk between the United States and Iran in Pakistan has been canceled by both sides. However, White House press secretary Karoline Leavitt confirmed on Monday that the Trump administration has discussed Iran’s offer to reopen the Strait of Hormuz if the United States lifts its blockade.

As a result, crude oil prices rose on Tuesday. The U.S. benchmark — West Texas Intermediate futures advanced more than 3% to settle at $99.93 per barrel. The global benchmark — Brent futures gained 2.8% to close at $111.26 per barrel.

Economic Data

The Conference Board reported that the consumer confidence index for April rose to 92.8, beating the Zacks Consensus Estimate of 89.8. The metric for March was revised upward to 92.2 from 91.8 reported earlier. 

The Present Situation Index — based on consumers’ assessment of current business and labor market conditions — fell to 123.8 in April from 124.1 in March. The Expectations Index — based on consumers’ short-term outlook for income, business, and labor market conditions — rose to 72.2 in April from 71 in March.

The S&P Cotality Case-Shiller U.S. National Home Price NSA Index posted a 0.7% annual gain for February 2026, down from a 0.8% rise in the previous month.