LIVE MARKETS-Relief rally fades as Middle East conflict keeps Wall Street on edge

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RELIEF RALLY FADES AS MIDDLE EAST CONFLICT KEEPS WALL STREET ON EDGE

Wall Street stocks are trading in the red as lingering uncertainty over the war in the Middle East continues to weigh on investor sentiment. Markets remain on edge as Iran and Israel press ahead with retaliatory strikes, raising fears of a broader and more prolonged conflict.

On Monday, U.S. equities caught a bid after President Trump said he would delay planned strikes on Iran's power grid, pointing to what he described as "productive talks" with Iranian officials. That announcement pushed major U.S. indexes more than 1% higher despite Tehran insisting that no negotiations with Washington were under way.

The relief rally proved short-lived. As questions resurfaced over the true state of diplomacy and the trajectory of the conflict, optimism faded and caution returned to Wall Street.

"All the President really did was offer a five-day reprieve not to destroy Iran's electricity grid: he offered an olive branch that, when you come to think of it, the clerics will never accept," writes David Rosenberg, founder and chief executive officer at Rosenberg Research, in a note.

"The war isn't over. So, I suggest that nobody gets over their skis on this one."

Only four of the 11 S&P 500 .SPX sectors are up on the day, with Energy .SPNY, up more than 2%, posting the biggest gain. Tech .SPLRCT and Communication Services, both down around 1%, are the weakest groups.

Here's a snapshot of where markets stood around 9:50 a.m. EDT:

(Gertrude Chavez-Dreyfuss)

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