Stocks Slip as Iran Diplomacy Optimism Fades; September Fed Hike Odds Rise to ~51%

US equities declined Tuesday as investors positioned defensively ahead of Wednesday's July CPI release: the S&P 500 closed down roughly 0.2-0.3% near 7,728-7,735, the Dow slipped about 0.3% to roughly 53,790, and the Nasdaq led losses, down around 0.6% to roughly 26,445, with technology stocks underperforming on renewed AI-capex-spending scrutiny (Intel, Nvidia). Brent crude rose about 1.4% to near $88.91/barrel. The primary driver was fading optimism on US-Iran diplomacy — Trump rejected Iran's war-reparations demand and Tehran dismissed near-term peace prospects, clouding the outlook for a durable Strait of Hormuz shipping arrangement. Separately, market-implied odds of a 25bp September Fed rate hike rose to roughly 51%, up from about 44% a day earlier, even as Cleveland Fed President Beth Hammack said it may take more than one hike to rein in inflation. The 10-year Treasury yield eased to about 4.68% after topping 4.71% Monday.