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Dow jumps nearly 400 points to record high as US-Iran peace deal lifts markets
Dow Jones hit a record high after rising nearly 400 points as the US-Iran peace deal boosted markets and falling oil prices improved investor confidence.
Dow Jones rallied to touch an all time high of 52,065 as it spiked another 400 points Tuesday morning, as markets continued to show their love for the Iran- US deal. Stocks were lapped up by investors as they anticipate a stable future in the oil markets after months of turmoil, easing concerns about a prolonged war in the middle east.
US-Iran deal boosts markets
President Donald Trump announced that the United States and Iran had reached an agreement to end their four-month conflict, and the Dow had already gained 470 points, or 0.9%, on Monday and closed at a record level, according to TradingView.
A senior US administration official said the agreement has already been signed electronically, while the formal signing is still pending, according to CNBC. Because the final agreement has not yet been officially signed in person, investors are continuing to monitor developments closely.
On Monday, the Dow Jones rose 468.77 points, or 0.92%, to close at 51,671.03. The Dow also hit a fresh intraday record during Monday's trading session. The broader S&P 500 climbed 1.65% to close at 7,554.29. The Nasdaq Composite surged 3.07% to finish at 26,683.94, marking its best single-day gain since March 31.
Also read: Inflation, gas prices and interest rates: 3 key ways US-Iran peace deal could impact global economy
Oil prices fall after Strait reopens
Trump said the Strait of Hormuz will reopen on Friday. After the announcement, oil prices dropped nearly 5%. The fall in oil prices helped improve investor sentiment. Lower oil prices usually reduce pressure on inflation and energy costs.
The price of US crude oil settled at around $80.75 per barrel on Monday, seeing a 4.9% drop since the announcement of the US Iran pact. This could be one of the determining factors on whether Federal Reserve will still increase interest rates due to inflation, or will take a more positive outlook of the economy. interest rates, or expectations that rates will remain stable, typically support stock market gains because borrowing becomes cheaper for companies and consumers.
SpaceX rally adds more market strength
Another major driver of Monday's rally was SpaceX, which continued its strong run after recently going public. SpaceX shares surged nearly 20% on Monday after gaining about 19%-20% during their market debut on Friday.
Unlike many recent market rallies driven mainly by AI and technology stocks, Monday's gains spread across several sectors. Financial companies participated in the rally. Industrial stocks also moved higher. Cyclical stocks, which tend to perform well when economic growth is expected, joined the advance as well. The broad participation across multiple sectors suggested stronger market confidence rather than a rally concentrated in only a few large technology companies.
Global stocks rise on peace hopes
Global markets also reacted positively to the improving geopolitical situation. Japan's Nikkei index touched a record intraday high on Tuesday. South Korea's Kospi index gained around 2%. European markets opened higher, led by banking and industrial stocks, as noted by TradingView.
Tuesday showed another strong day at the markets for US stocks, as the details of the final agreement are still awaited.
Overall, investors are betting that a successful US-Iran peace deal, lower oil prices, easing inflation concerns, and stronger economic conditions could continue supporting stock markets in the coming weeks.
