Dow falls as Israel-Iran conflict enters fifth day, Fed meeting in focus

Wall Street opened lower on Tuesday as escalating tensions in West Asia and anticipation around the U.S. Federal Reserve’s upcoming policy decision rattled investor sentiment. The Israel-Iran war, now in its fifth day, has deepened global geopolitical uncertainty, weighing on markets.

The Dow Jones Industrial Average fell 156.5 points, or 0.37%, to 42,358.62 at the open. The S&P 500 slipped 21 points, or 0.35%, to 6,012.15, while the Nasdaq Composite dropped 74.1 points, or 0.38%, to 19,627.08.

U.S. President Donald Trump, speaking aboard Air Force One after leaving the G7 Summit early, reiterated a hardline stance on Iran’s nuclear program. “I didn’t say I was looking for a ceasefire,” Trump told reporters. “I want a real end to Iran’s nuclear problem—with Tehran giving up enrichment entirely.” The conflict has already claimed dozens of lives in Israel and hundreds in Iran, further escalating market jitters.

Meanwhile, investor attention is also fixed on the Federal Reserve, which begins its two-day policy meeting Tuesday. The outcome is expected on June 18 Experts predict that this could mark the fourth consecutive meeting where the Fed keeps interest rates unchanged. Fed Chair Jerome Powell faces pressure from multiple fronts, stubborn inflation, a softening labour market, and the broader economic uncertainty fueled by geopolitical tensions and trade policy.

The latest U.S. retail inflation data showed resilience, defying the impact of tariffs for a second straight month. Still, policymakers remain cautious, signaling that rate adjustments may only come after there is greater clarity around Trump’s tariff strategies and their economic impact. Against this complex backdrop, most analysts anticipate the Fed will hold rates steady once again, even at the risk of drawing renewed criticism from the White House.