S&P 500 falls into the red as unraveling Iran situation overhangs market

The S&P 500 moved lower on Tuesday as hopes among investors that the the Strait of Hormuz would reopen faltered, exacerbating lingering doubts that the U.S. and Iran can reach a broader resolution to the conflict.

The broad market index traded down 0.1%, while the Nasdaq Composite fell 0.4%. The Dow Jones Industrial Average shed 42 points, or 0.1%.

The moves come as oil prices rose amid uncertainty over the Middle East conflict, with the secretary of Iran's Supreme National Security Council reiterating that the strait would not reopen until its conditions have been met, per Reuters. U.S. West Texas Intermediate futures were last up 1% at above $83 a barrel. International benchmark Brent crude also gained 1% to above $88 a barrel.

Iranian Foreign Minister Abbas Araghchi had said earlier this week there was "no possibility of restarting negotiations" as long as the U.S. continues violating the June memorandum of understanding and does not compensate Iran for those violations, according to the semi-official Tasnim News Agency.

However, investors took comments from Pakistani Defense Minister Khawaja Asif as a positive signal Tuesday. In an interview with Bloomberg News, the official said that "things are shaping up again in favor of a peace arrangement or a deal."

Investors will next turn to a key batch of inflation data, with the July consumer price report due Wednesday and the producer price index out Thursday. The readings could prove particularly important after a weak jobs report complicated the Fed's outlook.