The Nasdaq Composite ended lower Tuesday, extending recent volatility as investors navigated escalating tensions in the Middle East war involving the United States, Israel, and Iran. The tech-heavy index closed at 22,516.69, down 232.17 points or 1.02%, paring steeper intraday losses after early reports of potential indirect U.S.-Iran talks sparked a late-session rebound in broader markets.

The decline followed a turbulent session where the Nasdaq fell as much as 2-3% at points amid fears of prolonged oil supply disruptions through the Strait of Hormuz. Brent crude extended its rally, trading near $84 per barrel at peaks before easing slightly on hopes for diplomatic progress. Higher energy costs raised inflation concerns, pressuring growth-oriented tech stocks that dominate the index.

The broader market mirrored the unease. The S&P 500 slipped about 0.9% to around 6,847, while the Dow Jones Industrial Average fell roughly 403 points or 0.83% to 48,501.27. Trading volume was elevated, reflecting defensive positioning amid headlines. Asian markets opened sharply lower Wednesday, with South Korea’s Kospi tanking amid regional ripple effects.

Geopolitical developments drove the action. Fresh strikes on Iranian targets intensified supply fears, but President Donald Trump’s statement that the U.S. Navy would escort tankers and provide political risk insurance for shipping lanes offered reassurance. A New York Times report of indirect Iranian contacts with the U.S. to discuss ending the conflict boosted hopes for containment, helping futures reverse early losses and contributing to the Nasdaq’s recovery from session lows.

Tech giants faced selling pressure. Big names in semiconductors, software, and consumer tech lagged as higher borrowing costs from potential inflation weighed on valuations. Energy and defense-related plays provided some offset in the broader market, but the Nasdaq’s growth tilt made it more vulnerable to risk-off sentiment.

Analysts noted historical precedent: equities often shake off geopolitical shocks if disruptions prove short-lived. Past Middle East conflicts have led to temporary volatility but limited long-term damage unless oil spikes persist. Current levels, with Brent up sharply from mid-February, stoke caution, potentially delaying Federal Reserve rate cuts and pressuring multiples.

Pre-market futures Wednesday showed tentative gains. Nasdaq-100 futures rose about 0.4-0.5%, S&P 500 contracts added 0.3-0.4%, and Dow futures climbed 0.2-0.3% after overnight dips. The shift reflected optimism around de-escalation signals, though traders remained vigilant for any escalation.

Corporate earnings added layers. Companies like Dycom Industries, Abercrombie & Fitch, and others reported or were set to report March 4, with focus on guidance amid macro uncertainty. Tech earnings from Broadcom later in the week loomed large for Nasdaq sentiment.

The Nasdaq’s 52-week range spans roughly 14,784 to 24,020, with the index up modestly year-to-date before recent pullbacks. Tuesday’s close marked a retreat from February highs near 23,000, driven by war-related volatility rather than fundamental shifts.

Broader implications include inflation risks from sustained oil prices, which could feed into consumer costs and complicate Fed policy. Treasury yields ticked higher, signaling bets on stickier inflation. Gold held firm as a safe haven, while the dollar strengthened modestly before pausing.

As the conflict enters its sixth day, market participants eye any negotiation breakthroughs or further military developments. A rapid de-escalation could spark a relief rally, while prolonged tensions sustain pressure on risk assets like those in the Nasdaq.

For now, the index’s performance reflects the market’s balancing act: resilience in fundamentals versus headline-driven swings. Investors continue monitoring oil trajectories, diplomatic channels, and upcoming data for clues on direction.