Latest US Strikes Fails to Dampen Optimism as Peace Deal Hopes Lift Wall Street Stocks

Wall Street Stocks Reach Fresh Records Amid Hopes for Middle East Peace Deal

Tuesday saw a mixed performance on Wall Street, with stocks mostly rising and lifting the S&P 500 and Nasdaq to fresh records. The gains were largely driven by optimism surrounding a potential Middle East peace deal, which has raised hopes for a sustained retreat in crude oil and yields.

Despite a significant jump in Brent oil prices, the US military strikes on Iran have prompted worries about a military rebuttal from Tehran. However, the progress on US-Iran negotiations has led to a shift in investor sentiment, with risk-on winds dominating Wall Street. The potential for a peace deal would strengthen business fundamentals and the economic outlook, offsetting the adverse impact of overnight tensions between the two nations' militaries.

While the Dow edged down from last week's records, both the S&P 500 and Nasdaq finished at new all-time highs. One of the big movers was chip company Micron, which saw its stock surge nearly 20 percent following a favorable analyst report from UBS. This report highlighted the company's connection to the artificial intelligence boom, making Micron the latest tech giant worth more than $1 trillion.

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Global Markets React to Iran Developments

The market reaction to the US military strikes on Iran was swift, with stock markets rallying elsewhere and crude futures dropping below $100 a barrel after reports that an Iran deal might come within days. However, the situation took a turn for the worse when US forces said they had attacked missile sites in southern Iran and boats trying to lay mines.

Iranian state media reported overnight blasts in the southern port city of Bandar Abbas, near the Strait of Hormuz, and the country's Revolutionary Guards said its forces had downed a US drone entering its airspace and had fired at an F-35 fighter jet. Despite the strikes, Secretary of State Marco Rubio said on Tuesday that a deal remained within reach.

Market Performance

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The Brent North Sea crude, the international benchmark, jumped almost 4.5 percent on Tuesday to edge back above $100 a barrel before pulling back a bit. In Europe, Frankfurt and Paris closed off around one percent, while London ended just 0.2 percent ahead as traders returned after a long holiday weekend in Britain.

British oil giant BP topped the losers' chart, off more than four percent after it unexpectedly removed Albert Manifold as chairman only months into his tenure, citing "serious concerns" about governance standards, oversight and conduct at the company.

Investors were quick to express disappointment at Ferrari's unveiling of its first electric model, with shares in the Italian luxury carmaker skidding six percent.