Dow Jones, S&P 500 end at record highs as US-Iran deal hopes sink oil prices, bond yields
Benchmark indices on Wall Street extended their gains for the fourth day running on Tuesday, August 4, as oil prices sank, treasury yields fell on hopes of a short-term deal between the US and Iran, that could reopen the Strait of Hormuz yet again.
The Dow Jones and S&P 500 both ended at record high levels overnight. The Dow Jones gained 900 points, extending its two-day advance this week to 1,600 points and gains across the last four sessions past 2,500 points. The S&P 500 gained 1.8%, while the Nasdaq Composite rose 2.6%.
It was the first time in history that the Dow Jones closed above the mark of 54,000 and the S&P 500 closed above the mark of 7,700.
The chip stocks-heavy Nasdaq 100 index surged 3.3%, marking its best four-day rally since 2020. The index is also up 2,500 points during this period.
Why Did The US Markets Rally on Tuesday?
In an interview to CNBC, US Treasury Secretary Scott Bessent said that the US and Iran could reach a deal to reopen the Strait of Hormuz by as early as Tuesday or Wednesday. He added that the deal would allow commercial shipping to move freely through the region.
US Secretary of State Marco Rubio added that the US is involved in talks between Iran and Oman, and although progress is being made, no final decision has been taken yet.
According to a statement by Qatar, who is acting as a key mediator in these negotiations, efforts are ongoing for a short-term resolution that could bring the US and Iran back to bigger talks.
US President Donald Trump spoke to Qatari Emir Sheikh Tamim Bin Hamad Al-Thani and discussed de-escalation of the current situation, while a Bloomberg report stated that Iran is considering allowing European nations to remove mines from the Strait of Hormuz, although Iran has not officially confirmed this piece of news.How Did Markets React To The Latest US-Iran Developments?
As a result of these developments, crude oil prices fell sharply, with Brent crude slipping below the $80 a barrel mark for the first time in over two weeks. The benchmark fell 6% overnight. WTI crude also fell below $75 a barrel.
An impact of these developments was also seen in the US bond yields, which had surged to multi-year highs at the start of the month. The 10-year treasury yield cooled off to 4.6%, while the 30-year yield, which was at the highest level since 2007, fell to 5.17%.
The US Dollar index also continues to trade below the mark of 100.
What Are The Key Wall Street Triggers For The Day?
The job openings report projected a steady labor market on Tuesday, while today’s session will see private payrolls figures being reported by ADP.
During the course of the day, companies such as Eli Lilly, Novo Nordisk, Sandisk, Western Digital, Walt Disney, Uber, Shopify and many others will be reporting their quarterly results.