U.S. Stocks Nearing Record High, Oil Dips Amid Tensions in U.S.-Iran Talks
U.S. stocks moved closer to their highest levels as conflicting statements from Washington and Tehran about the status of their discussions created confusion among investors. The S&P500, a major stock benchmark, climbed by 1.8 percent on Tuesday to top 7,700 for the first time, surpassing its previous record of 7,620.90 set on June 2. Technology companies led the rise, with Meta, Amazon, and Alphabet all seeing gains of over 4 percent. The Nasdaq Composite, which is heavily weighted toward tech stocks, also rose by 2.1 percent, although it remains 4.3 percent below the record it reached the same day in June. Palantir Technologies, a data analytics company closely tied to the U.S. and Israeli defense sectors, was among the biggest gainers, with its shares soaring 29.5 percent on the back of forecasting-busting second-quarter revenue of $1.94 bn.
Meanwhile, the Dow Jones Industrial Average, a measure of large corporate performance, hit a record high of 54,085.88 for a second straight day, largely due to strong performance from the Magnificat Seven tech companies, a group of major tech firms. Meta rose 6 percent, while Microsoft, Amazon, and Alphabet increased their share values by between 4.4 and 4.9 percent.
On the energy front, Brent crude, the primary global oil benchmark, dropped by around 5 percent on Monday and continued to fall, standing at $79.11 per barrel as of 01:00GMT, down about 13 percent from the previous week. However, the price rebounded slightly to about $84.50 per barrel by 02:00GMT on Tuesday when Asian markets opened. The initial drop suggested that investors were shifting their risk preferences, reacting to U.S. President Donald Trump's claim that talks with Iran were ongoing, even though Iran later denied engaging in any dialogue with the U.S. The drop in oil prices followed growing hopes for an end to the months-long disruption to shipping in the Strait of Hormuz, a conduit for about one-fifth of global oil supplies before the start of the U.S.-Israel war on Iran in late February.
The uncertainty over the U.S.-Iran situation also affected Asian stock markets. The Nikkei 225 in Japan and the Hang Seng Index in Hong Kong each fell 0.8 percent, while South Korea’s KOSPI dropped by 1.2 percent, adding to the turmoil in regional financial markets. The decline in the KOSPI was particularly notable, as the index has been highly volatile in 2026 due to fluctuating demand for memory chips used in artificial intelligence. However, the rally continued in Asia on Wednesday morning, with key indexes in Japan and South Korea making major gains. Tokyo’s benchmark Nikkei 225 was up 3 percent as of 01:00 GMT, while the Kospi in Seoul was up 4.6 percent.
Trump claimed that negotiations with Iran were in progress, and that he wanted to provide the country with “every last chance” to avoid further military confrontation. His remarks came after he announced a decision to cancel what he called the “biggest attack since World War II” following discussions with leaders in the Gulf. This shift in U.S. strategy suggested a potential easing of tensions, at least for now. The growing market optimism also came as both U.S. and Iranian officials touted progress in talks between Iran and Oman aimed at restoring shipping in the strait. U.S. Secretary of State Marco Rubio said on Tuesday that while an agreement had yet to be reached, he hoped that a deal would “happen very shortly”. U.S. Treasury Secretary Scott Bessent said in an interview with CNBC that an agreement on the strait could be reached as soon as Tuesday or Wednesday. Iran’s Foreign Ministry spokesperson, Esmaeil Baghaei, said talks with Omani officials on designating safe routes for vessels have been “positive”.
In contrast, Iran denied that any talks were occurring, with Foreign Ministry spokesman Esmail Baghaei stating at a press conference that Tehran had no contact with U.S. officials. Instead, he emphasized that Iran was currently focused on negotiations with Oman to address the issue of ship traffic through the strategic Strait of Hormuz. According to Baghaei, U.S.-Iran relations were not a priority at the moment and would be discussed in the “next stages.” Maritime traffic in the Gulf has been severely constrained since the start of the war amid the threat of Iranian attacks on vessels in and around the strait, as well as a U.S. blockade of Iranian ports. Just nine vessels transited the critical waterway on Sunday, according to ship-tracking platform MarineTraffic, compared with roughly 130 daily crossings before the start of the war. The U.S. military said on Tuesday that the strait was “free and open” to all commercial vessels despite Tehran’s repeated insistence that it has the right to control the movement of traffic in the waterway. “Over the past three months, U.S. forces have assisted more than 1,000 vessels in successfully transiting the strait despite unwarranted Iranian aggression, and these transits continue today,” U.S. Central Command said in a post on social media.
Market analyst Melissa Brown, managing director of Investment Decision Research at SimCorp, told Al Jazeera that the recent stock rally was “without a real fundamental reason to support it.” She pointed out that the surge in stock values appeared to be driven more by speculation and uncertainty than by strong economic data or policy clarity. Despite this, investors continued to pour money into the market, especially in the after-hours trading session, where S&P500 futures rose by more than 0.2 percent.