Wall Street traded mixed on Tuesday as investors reacted to volatile oil prices and comments from President Donald Trump on the outlook for a possible U.S.-Iran agreement.
The cautious session followed a strong rally on Monday, when U.S. stocks posted their best performance since August amid renewed enthusiasm for artificial intelligence shares.
S&P 500 Flat as Nasdaq Hits Record High
At 12:09 ET, the S&P 500 was little changed at around 7,763.56 points.
The Nasdaq Composite gained 0.3% to approximately 27,200.70 points and reached a new intraday record high.
Meanwhile, the Dow Jones Industrial Average fell 0.5% to around 51,789.02 points.
The mixed performance came after all three major U.S. indices advanced strongly in the previous session.
AI Stocks Drive Wall Street Rally
Monday’s gains were led largely by renewed optimism around artificial intelligence.
Investor sentiment improved after Meta Platforms unveiled a new AI model that raised expectations for wider adoption of agentic AI among consumers.
Meta shares climbed, while chipmakers including AMD and Intel also benefited.
These companies produce processors that are expected to play an important role in running advanced AI agents.
The Philadelphia Semiconductor Index surged 4.3%, while the Nasdaq Composite recorded its first record closing high since early June.
Oil Prices Fall Below $100
Outside the technology sector, investors remained focused on falling oil prices.
Brent crude futures dropped below $100 per barrel as markets responded to signs of possible diplomatic progress in the Middle East.
Lower oil prices have also raised hopes that some disrupted regional energy flows could eventually return.
Iran has reportedly offered to reopen the Strait of Hormuz within seven days if the United States begins reducing military pressure.
Trump Signals Possible Iran Deal
Trump said the United States and Iran could reach an agreement after the upcoming midterm elections.
He has also said he would be open to meeting Iranian President Masoud Pezeshkian during the United Nations General Assembly in New York.
However, reports suggested that such a meeting was unlikely to take place.
Investors continue to monitor developments closely because any diplomatic progress could have a major impact on oil markets and broader risk sentiment.
Oil Supply Risks Remain
Despite recent declines in crude prices, supply risks have not disappeared.
Traders remain concerned that ongoing disruptions in the Middle East could keep energy prices elevated.
Higher oil prices could also add to inflation pressures and increase the risk of tighter monetary policy from major central banks.
Tensions between Washington and Tehran also remain high.
Trump has continued to pressure Iran to accept a U.S.-backed agreement, while Iranian officials have warned of retaliation if American military operations escalate.
Bab el-Mandeb Adds Another Energy Risk
Fighting in Yemen has created another source of uncertainty for global oil markets.
Iran-backed Houthi forces and Saudi-aligned groups have been competing for territory near the Bab el-Mandeb Strait.
The waterway connects the Red Sea with the Gulf of Aden and has become increasingly important for Saudi oil shipments.
Saudi Arabia has relied more heavily on the route since disruptions began in the Strait of Hormuz earlier this year.
Recent reports, however, suggest Saudi oil flows have started to improve despite previous attacks on energy infrastructure.
Markets Await Xi Jinping’s Washington Visit
Investors are also preparing for Chinese President Xi Jinping’s planned visit to Washington on Thursday.
The trip would mark his first state visit to the United States during Trump’s second term.
The two leaders are expected to discuss several major issues, including artificial intelligence safety and the future of the current U.S.-China trade truce.
The temporary trade agreement is due to expire in November.
Deutsche Bank analysts said markets are particularly focused on whether the two countries can extend the truce and avoid another escalation in trade tensions.
