The S&P 500 fell on Tuesday as weakness in semiconductor stocks continued and investors weighed geopolitical uncertainty in the Middle East. The benchmark index declined 0.26% to close at 7,386.65 after surrendering early gains, reflecting a shift in market sentiment. Polymarket traders are betting the index will open lower on Wednesday, with the June 10 contract implying just a 22% probability of a higher open.

Market Drivers

Markets are facing a combination of rising geopolitical tensions and inflation concerns. The U.S. launched "self-defense strikes" against Iran late Tuesday after Washington accused Tehran of shooting down a U.S. Army Apache helicopter over the Strait of Hormuz. Iran retaliated by targeting U.S. sites in Jordan, Bahrain, and Kuwait, threatening the fragile ceasefire and complicating broader peace efforts.

Investors are also awaiting May's consumer price index report due Wednesday morning. Economists surveyed by Dow Jones expect annual inflation to accelerate to 4.2%, marking the first reading above 4% since May 2023. Oil prices moved higher following the latest developments, with West Texas Intermediate crude futures rising around 1% in overnight trading.

Outlook and Performance

Despite recent volatility, the broader market remains supported by resilient economic data and optimism that tensions in the Middle East can eventually be contained. President Donald Trump stated a deal with Iran could be reached within "two or three days" to reopen the Strait of Hormuz, potentially easing concerns over global energy supplies.

Materials, consumer discretionary, and real estate stocks outperformed during Tuesday's session, suggesting investors are rotating into areas that could benefit if energy prices stabilize and economic growth remains intact. S&P 500 futures were down 0.47% early Wednesday.

The S&P 500 opened Tuesday at 7,438.66, above Monday's close of 7,405.73, meaning the June 9 Polymarket bet resolved "Up." The contract recorded about $87,405 in traded volume before settling.