The tech-heavy Nasdaq Composite hit an intraday record high on Tuesday, its first such record since early June. The index was helped by strong gains in Alphabet, the parent company of Google. At 9:58 am ET, the Nasdaq was up 109.38 points, or 0.40%, at 27,231.48. The S&P 500 gained 5.59 points, or 0.07%, to 7,770.29.The Dow Jones Industrial Average fell 57.87 points, or 0.11%, to 51,990.96.
Investors were also watching signs that the US and Iran could hold talks. A senior Iranian official told Reuters that Tehran could reopen the Strait of Hormuz within seven days if the US eases military and political pressure. The Strait of Hormuz is a major route for global oil shipments, so any reopening could reduce concerns about oil supply. This possibility helped improve overall market sentiment on Tuesday.
Oil prices fall
Saudi Arabia has also restarted operations at its East-West Pipeline, according to three sources cited by Reuters. The development added to hopes that oil supply problems could ease. Investors are closely watching energy developments because higher oil prices can increase inflation and put pressure on interest rates.
Brent crude fell 1.2% after the latest developments around Iran and Saudi Arabia. However, oil prices remained close to the $100-a-barrel level. This means the oil market is still under pressure even after the latest decline. Investors are watching whether further progress on the Middle East situation can push oil prices lower.
US-Iran talks
Oil prices have become an important factor for stocks because higher energy costs can increase inflation. Higher inflation can make it harder for the Federal Reserve to cut interest rates. Lale Akoner, global market strategist at eToro, said markets are treating oil as a key macroeconomic variable because interest rates and the wider stock market are closely linked to oil prices and geopolitical developments.
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US-Iran discussions are expected to take place on the sidelines of this week’s United Nations General Assembly meeting. Investors are hoping the talks could lead to progress on the Middle East conflict. Any progress could reduce fears about disruptions to oil supplies and help market sentiment. Reuters reported that the talks are expected alongside several major diplomatic meetings this week.
US-China summit
A US-China summit is scheduled for Thursday. Traders are hoping the meeting can help extend the existing trade truce between Washington and Beijing. A longer trade truce could reduce uncertainty for companies and investors. President Donald Trump is also scheduled to meet several world leaders later on Tuesday, keeping geopolitical developments in focus.
Alphabet stock rises
Alphabet shares gained about 2% on Tuesday. The rise helped push the S&P 500 Communication Services sector up 1.2%. Alphabet’s strong performance was one of the major factors behind the Nasdaq’s move to a record intraday level. The gain also added to the broader strength in large technology companies.
Also read: Oil prices fall as Iran signals Strait of Hormuz reopening: What it means for crude prices
Meta shares rose about 0.5% on Tuesday. This came after the stock jumped about 11% on Monday. Investors are betting that Meta’s new AI agent, Muse, could create a new source of revenue for the company.
Lale Akoner of eToro said the market received credible confirmation that Meta’s AI monetisation plans are progressing, increasing confidence that the company’s large AI spending could turn into products consumers use, according to Reuters.
AI stocks today
Other Magnificent Seven stocks, including Apple and Tesla, were also slightly higher. Their gains supported the broader technology-heavy Nasdaq. However, the rally was not spread evenly across all major AI-related stocks.
Several chip companies that have benefited strongly from the AI boom were lower. Texas Instruments fell about 1%. Broadcom slipped about 0.6%. Nvidia was roughly flat. This shows that while large technology stocks were supporting the Nasdaq, some major AI chipmakers were not joining the rally.
Fed rate hike
Federal Reserve policymakers are watching both AI-related demand and the oil shock as possible sources of inflation. Higher oil prices can raise costs across the economy, while strong demand linked to AI investment could also add to price pressures. These concerns are important because the Fed has been trying to bring inflation back toward its 2% target.
Traders now see a 53.1% chance of at least a 25-basis-point interest-rate increase in October. This follows the Fed’s rate hike earlier this month. The figure comes from the CME Group’s FedWatch Tool. A higher chance of another rate increase could put pressure on stocks because higher borrowing costs can reduce spending and investment.
Fed inflation outlook
Boston Fed President Susan Collins said she supported last week’s interest-rate increase. Collins pointed to the risk that future inflation could remain above the Fed’s 2% target.
Investors are also waiting for comments from Fed Vice Chair Philip Jefferson, New York Fed President John Williams and Richmond Fed President Thomas Barkin later Tuesday, according to Reuters. Their comments could provide more clues about the Fed’s next interest-rate decision.
10-year treasury yield
The benchmark 10-year US Treasury yield was around 4.9%. The yield remained near levels that have weighed on stock markets in recent sessions. High Treasury yields can make stocks less attractive and can increase borrowing costs across the economy. This means investors are watching both oil prices and bond yields as they assess whether the stock rally can continue.
US stocks today
Outside the major technology names, Amgen shares gained 2.3%. The drugmaker said its experimental treatment for Sjogren’s disease met the main goal of reducing disease activity in a late-stage clinical trial, according to Reuters. The positive trial news helped lift the company’s stock.
On the NYSE, advancing stocks outnumbered declining stocks by 1.62 to 1. On the Nasdaq, advancing stocks outnumbered declining stocks by 2.02 to 1. This shows that the market’s positive tone was broader than just the biggest technology companies.
The S&P 500 recorded three new 52-week highs and nine new lows. The Nasdaq Composite recorded 24 new highs and 40 new lows. So, despite the Nasdaq reaching a record intraday level, many individual stocks were still trading near their yearly lows.
Investors are now watching whether oil prices continue to fall as hopes for a reopening of the Strait of Hormuz increase. They are also waiting for developments from US-Iran talks and Thursday’s US-China summit. At the same time, the 10-year Treasury yield near 4.9% and the possibility of another Fed rate hike remain risks for stocks. The Nasdaq’s record move is therefore happening alongside several major economic and geopolitical factors that could influence markets in the coming days.