Wall Street opened sharply higher on Tuesday, with the S&P 500 and Dow Jones Industrial Average reaching fresh record highs.
Investor sentiment improved as oil prices and U.S. Treasury yields declined following encouraging reports about possible progress in Middle East peace negotiations.
Markets were also preparing for several major corporate earnings releases, including results from AMD and, according to the report, SpaceX after the closing bell.
Major U.S. Stock Indexes Rally
At 09:32 ET, the benchmark S&P 500 rose 0.6% to 7,642.66 points, reaching a new intraday record for the first time since June 2.
The Dow Jones Industrial Average climbed 1.4% to 53,934.14 points, breaking its previous record from July 7.
Meanwhile, the technology-focused Nasdaq Composite advanced 1.1% to 26,189.98 points.
Strong Start to August Continues
U.S. equities began August with strong gains during Monday’s session.
The rally was supported by a steep decline in oil prices as investors became more optimistic about a possible diplomatic breakthrough in the conflict involving Iran.
Technology stocks also recovered from losses recorded during the previous month.
However, concerns remain about whether the enormous spending on artificial intelligence infrastructure, including data centers and advanced chips, can continue at its current pace.
U.S. Signals Progress Toward Iran Agreement
U.S. Treasury Secretary Scott Bessent said he believed Washington and Tehran were moving closer to an agreement.
During an interview with CNBC, Bessent suggested that a deal could potentially be reached within a day or two.
The proposed agreement would focus on reopening the Strait of Hormuz and moving the conflict toward a more stable position.
Qatar Continues Mediation Efforts
Qatar also said diplomatic efforts to resolve the conflict remained active.
According to media reports, negotiations were focused on reducing tensions and reopening the Strait of Hormuz.
Qatar has acted as a regional mediator between the United States and Iran. Reports indicated that wording for a possible agreement had been drafted and circulated among negotiators.
However, no agreement to begin direct talks had been confirmed. Qatar was reportedly prioritizing a short-term solution.
Oil Prices Reverse Earlier Gains
Oil prices fell sharply following the diplomatic reports.
Brent crude futures dropped 4.1% to $80.32 per barrel after gaining more than 2.5% earlier in the session.
U.S. West Texas Intermediate crude futures declined 4.7% to $76.51 per barrel.
Lower oil prices helped ease concerns that disruptions to Middle Eastern energy supplies could trigger another wave of inflation.
Strait of Hormuz Risks Remain
Despite growing diplomatic optimism, investors continued to monitor conflicting signals from the United States and Iran.
A new attack on a ship in the Strait of Hormuz added to concerns about the security of the strategically important waterway.
Prolonged supply disruptions could push energy prices higher, increase inflation and encourage central banks to raise interest rates.
However, the latest decline in oil prices reduced some of those fears.
Treasury Yields Move Lower
The benchmark U.S. 10-year Treasury yield also declined during the session.
Treasury yields often reflect expectations surrounding inflation and future interest rates. Falling yields can support stocks because they reduce borrowing costs and make equities more attractive compared with bonds.
The combination of lower oil prices and bond yields provided further support for Wall Street’s record-breaking rally.
U.S. and Iran Offer Conflicting Statements
Earlier in the week, U.S. President Donald Trump said renewed negotiations with Iran would begin soon.
However, Iranian Foreign Ministry spokesperson Esmaeil Baghaei denied that direct discussions with the United States were taking place.
Iran did confirm that talks with Oman were continuing over shipping access through the Strait of Hormuz.
Traffic through the waterway remained limited, while military tensions across the Gulf stayed elevated.
AMD and Major Earnings Reports in Focus
Investors were also preparing for several closely watched corporate earnings reports.
AMD was scheduled to release its results after the closing bell. Traders were looking for fresh information about demand for artificial intelligence chips and the wider outlook for the AI industry.
The provided report also said SpaceX was due to publish its first quarterly results following its June market debut.
Palantir and Snap Shares Jump
Palantir shares surged after the data analytics company raised its full-year financial outlook.
The company also reported strong growth in its U.S. commercial business, reinforcing optimism about demand for its artificial intelligence and data platforms.
Snap shares also moved sharply higher after the social media company reported a narrower quarterly loss than analysts had expected.
July Jobs Report Could Shape Fed Expectations
Later in the week, investors will turn their attention to the U.S. employment report for July.
The data could provide important clues about the health of the economy and the Federal Reserve’s next interest rate decision.
For now, falling oil prices, lower Treasury yields and strong corporate earnings are supporting risk appetite and driving major U.S. stock indexes to new records.
