Oil Price Volatility Weighs on US Stocks as Inflation Fears Linger

US stocks retreated slightly from record highs on Tuesday as investors grappled with ongoing uncertainty over the impact of the war between the US and Iran on global oil prices.

The S&P 500 fell 0.3% to 7,728.20, its second modest drop since setting an all-time high on Friday. The Dow Jones Industrial Average dipped 184 points, or 0.3%, while the Nasdaq composite sank 0.6%.

Brent crude prices swung wildly, briefly jumping above $90 per barrel before settling at $88.91, up 1.4% from Monday. This volatility has become a norm since the US and Israel attacked Iran in late February, leading to the closure of the Strait of Hormuz and keeping much of the world's oil pent up in the Middle East.

Oil prices above $90 per barrel have pushed the average cost for a gallon of regular gasoline to $4.01, according to AAA, up from less than $3.14 a year ago. The Fed will release its latest monthly reading on inflation on Wednesday, which economists expect to show inflation remains high but decelerated to 3.4% in July from 3.5% in June.