Stocks in the United States traded at record highs on Tuesday, as investors were optimistic that a lull in fighting in the Middle East would hold and that corporate earnings would remain robust.
Strong earnings from large tech companies with a heavy involvement in artificial intelligence, including Amazon, Microsoft and Palantir, have driven a recent rally.
Markets also got a jolt on Tuesday when Treasury Secretary Scott Bessent said in an interview with CNBC that “there is a chance we may have a deal today or tomorrow” to open the Strait of Hormuz, which has been disrupted for months.
Oil prices fall.
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The price of Brent crude, the global benchmark for oil, fell more than 5 percent to below $79 a barrel, the lowest price in three weeks.
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West Texas Intermediate crude, the U.S. benchmark, fell to around $76 a barrel.
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Investors and analysts are focused on the continued disruption to shipping in the Strait of Hormuz, the narrow waterway between Iran and Oman that is a vital trading route for oil and natural gas that normally carries as much as one-fifth of the world’s oil supply. When asked whether Iran would be allowed to charge a toll in the Persian Gulf when traffic resumed, Mr. Bessent said there would be “freedom of movement.”
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The market is also closely watching efforts by the Iranian-backed Houthi militia in Yemen to restrict traffic in the Bab al-Mandab Strait at the southern end of the Red Sea, which Saudi Arabia has used as an alternative to the Strait of Hormuz.
Global stocks mostly gain.
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The S&P 500 climbed nearly 2 percent at midday on Tuesday, beating the record high it set in early June.
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In Europe, the Stoxx 600, a broad index that tracks the region’s largest companies, rose 0.7 percent.
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Stocks in Asia were mostly higher, with the Nikkei 225 in Japan adding 0.3 percent and KOSPI in South Korea jumping 1.6 percent. Indexes in Hong Kong and Taiwan closed lower.
Gasoline prices tick lower.
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Gas prices fell 1 cent on Tuesday to a national average of $4.09 a gallon, according to the AAA motor club. The cost for drivers has gone up about 37 percent since the war began.
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Gas prices don’t move in lock step with crude, usually trailing increases or drops by a few days.
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The national average price of diesel rose 1 cent to $5.37 a gallon on Tuesday, up 43 percent since the start of the war.
What they are saying: ‘Still considerable uncertainty.’
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The oil market has welcomed signals that a potential agreement to revive talks between the United States and Iran is near, but traders may be getting ahead of themselves, analysts at ING wrote in a research note.
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“The scale of the sell-off seems fairly overdone, given that there’s still considerable uncertainty,” they wrote, adding that the market has been optimistic before, “only to see things unravel.”
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