Stocks dropped after another volatile session on Tuesday as market participants weighed the implications of a prolonged conflict between the United States and Iran following new comments from President Donald Trump.

The Dow Jones Industrial Average (DIA  ) settled 400 points lower to close at 48,501.27, while the S&P 500 Index (SPY  ) lost 0.9% and the Nasdaq Composite (QQQ  ) fell 1% to end the session at 6,816.63 and 22,516.69, respectively. At session lows, the S&P 500 was down 2.5% and the Nasdaq lost 2.7%, while the Dow dropped more than 1,200 points.

On Tuesday, Trump said the U.S. Navy would escort oil tankers through the Strait of Hormuz if Iran follows through on threats of attack. International crude benchmark Brent (BNO  ) slipped from its highs to settle at 4.7% on Monday, while U.S. benchmark West Texas Intermediate (USO  ) also closed at up 4.7% on the comments.

"No matter what, the United States will ensure the FREE FLOW of ENERGY to the WORLD," Trump wrote in a post on his social media platform Truth Social. "The United States' ECONOMIC and MILITARY MIGHT is the GREATEST ON EARTH -- More actions to come."

Trump had previously warned that the conflict could extend for more than four weeks, impacting market outlooks on the U.S. economy. On Tuesday, all of the 11 sectors of the S&P 500 closed in negative territory, with materials, industrials and consumer discretionary posting the largest losses.

New York Federal Reserve President John Williams said in remarks on Tuesday that the growing conflict in the Middle East will affect policymakers' near-term inflation outlooks, noting that the central bank will have to "see how persistent" and "how long" the increase in energy prices is.

"Nobody can be sure of how long this [conflict] will last or the broader implications of these events in terms of financial conditions and oil prices," he added.

On the earnings front, Target (TGT  ) posted a disappointing fourth-quarter and full-year on Tuesday, as its same-store sale fell 2.5% during its holiday quarter and 2.6% for the year.

"I'm incredibly proud of how our team navigated through a challenging year in 2025, as they focused on serving our guests while positioning our business for profitable growth in 2026 and beyond," new CEO Michael Fiddelke said in a statement, adding that Target saw a "healthy, positive sales increase" last month.

For its current fiscal year, Target expects net sales to grow about 2% year-over-year and full-year adjusted earnings per share to range from $7.50 to $8.50.

Best Buy (BBY  ) shares rose on Tuesday after the retailer reported a surprise sales decline during its holiday season, as the company said it expects first-quarter same-store sales to return to growth of at least 1%.

"Our data sources show our overall market share was at least flat, pointing to slightly softer customer demand for our industry during the holiday quarter," CEO Corie Barry said in a statement.

Looking ahead, market participants will turn their attention towards the ADP's monthly employment report for February on Wednesday, alongside earnings reports from companies including CrowdStrike (CRWD  ) and Broadcom (AVGO  ).