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Wall Street dips after strong rally as US-Iran tensions escalate

US stocks slipped on Friday as rising tensions between the U..

US stocks slipped on Friday as rising tensions between the United States and Iran slammed the brakes on this week's run that lifted the S&P 500 to a record high.

The Federal Reserve has signaled an interest rate cut as early as July, sparking a rally in stocks that helped the S&P 500 index close at a new record of 2,954.18 on Thursday.

But an escalation in tensions in the Middle East after President Donald Trump delivered a warning of an imminent attack on Iran weighed on sentiment.

"When you look at the magnitude of the move we've had in a short period of time, especially this week, I'm not surprised to see the markets lower today," said Art Hogan, chief market strategist at National Securities in New York.

"We know there's a G20 meeting, which could be binary in its results being bullish or bearish. It's not unusual for investors to take a bit of a pause."

The United States and China have said that they would restart their trade talks after a long lull at the Group of 20 summit in Japan next week. Fears of the impact of the prolonged trade war on global economic growth had triggered the worst monthly performance of U.S. stock indexes this year in May.

The possibility of a disruption of oil flows if the U.S. attacks Iran fueled a 1% rise in crude prices and pushed the energy sector 0.4% higher.

At 9:52 a.m. ET, the Dow Jones Industrial Average was down 24.19 points, or 0.09 percent, at 26,728.98. The S&P 500 was down 6.67 points, or 0.23 percent, at 2,947.51 and the Nasdaq Composite was down 37.68 points, or 0.47 percent, at 8,013.66.

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