Stocks slip, with oil prices higher as war uncertainty is high

NEW YORK/LONDON — Wall Street stock indexes eased on Tuesday (March 24) and oil prices extended recent sharp gains as worries persisted over how long the US-Israeli war on Iran will go on, even as President Donald Trump said the US was talking to "the right people" in Iran to reach an agreement to end hostilities.

Washington has sent a 15-point proposal to Iran aimed at ending the war in the Middle East, Reuters and other media in the US and Israel reported on Tuesday after markets closed. 

Earlier, two people familiar with the matter told Reuters the Pentagon is expected to send thousands of soldiers from the US Army's elite 82nd Airborne Division to the Middle East, adding to a big US military buildup.

"There's still a lot of confusion and lack of clarity about Iran and how long the military operations will last and what the consequences for oil and global trade are. That's the key driver," said Oliver Pursche, senior vice president and advisor at Wealthspire Advisors.

"Today we're seeing a little bit more negative sentiment seep back into markets," he said.

The Dow Jones Industrial Average fell 84.41 points, or 0.18 per cent, to 46,124.06, the S&P 500 fell 24.63 points, or 0.37 per cent, to 6,556.37 and the Nasdaq Composite fell 184.86 points, or 0.84 per cent, to 21,761.89.

US Treasury yields added to gains after a weak auction of two-year Treasury notes, and the dollar regained lost ground.

Stocks had rallied on Monday after Trump said he had ordered the military to postpone strikes against Iranian power plants following "productive conversations" with Tehran. Iran has denied talks with the US.

Brent futures settled higher at US$104.49 (S$139.86) a barrel. US West Texas Intermediate climbed 4.79 per cent, to US$92.35. 

With the war raging and shipments of about one-fifth of the world's oil and liquefied natural gas through the Strait of Hormuz curtailed, oil prices were expected to stay high.

Communication services and technology were among the day's biggest percentage declining sectors in the S&P 500.

MSCI's gauge of stocks across the globe rose 0.91 points, or 0.09 per cent, to 985.82.

The pan-European STOXX 600 index rose 0.43 per cent.

Earlier, data showed euro zone private sector growth nearly stalled this month as inflation expectations surged and delivery times soared, adding to mounting evidence the bloc is already suffering a tangible drag from the US and Israeli war on Iran.

The risk of persistent inflation arising from the escalating war with Iran was strong enough to convince Fed Governor Christopher Waller to switch his support to keeping interest rates on hold from cutting them, he said last week, as market expectations for the US central bank's next move shifted toward a hike in borrowing costs.

In Treasuries, the yield on benchmark US 10-year notes rose 2 basis points to 4.356 per cent, from 4.336 per cent late on Monday.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.06 per cent to 99.24, with the euro down 0.09 per cent at US$1.1602. 

Against the Japanese yen, the dollar strengthened 0.18 per cent to 158.72.

Spot gold rose 1.34 per cent to US$4,464.66 an ounce.

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