US stock markets continued their decline on Tuesday, as oil prices were pushed higher by a deadlock in negotiations between the US and Iran over the Strait of Hormuz, despite Pakistan's statement that the two sides were nearing a deal.

The S&P 500 fell 0.3%, giving back intraday gains, as Brent crude oil climbed back above $89 per barrel. Utility, energy, and industrial sectors saw gains, while major technology stocks continued to drag the broader market lower. The tech-heavy Nasdaq 100 also dropped 0.3%.

Key Market Drivers

Interactive Brokers Chief Strategist Steve Sosnick commented, "The market rallied significantly last week on expectations of a deal, but the lack of meaningful progress in the Persian Gulf situation has left investors disappointed." Amid volatile trading on Tuesday, investors are now eagerly awaiting the highly anticipated Consumer Price Index and Producer Price Index data to gauge the likelihood of a Federal Reserve rate hike in September.

Citigroup analyst Andrew Hollenhorst expects the July CPI report to show that prices outside of energy are continuing to cool, which will refocus market attention on the fundamentals of the US domestic economy. Capital.com Senior Market Analyst Daniela Hathorn stated, "Investors are increasingly leaning toward a scenario where inflation continues to moderate, the Fed remains patient, and earnings growth is strong enough to support current valuations."

Broader Market Sentiment

Optimism among US small businesses rose to near its highest level in a year in July, fueled by accelerated hiring and easing inflationary pressures. In after-hours trading, Super Micro Computer shares surged 9.8% after the company reported quarterly revenue guidance that exceeded analyst expectations.

Market Close Recap

At the closing bell, the S&P 500 was down 0.3% at 7,728.2 points. The Dow Jones Industrial Average fell 0.3% to 53,791.85 points. The Nasdaq Composite declined 0.6% to 26,445.45 points. The Nasdaq 100 dropped 0.3% to 29,525.48 points. The Russell 2000 index, however, bucked the trend, rising 0.3% to 3,027.115 points.