Wall Street delivered a mixed performance on Tuesday as investors balanced optimism over easing tensions between the United States and Iran against growing doubts about how quickly global oil flows can return to normal through the Strait of Hormuz.
The Dow Jones Industrial Average climbed 0.6% to a fresh record high, building on Monday’s gains after markets initially welcomed news of a peace agreement between Washington and Tehran.
The broader mood was less upbeat elsewhere, with the S&P 500 slipping 0.6% and the Nasdaq Composite falling 1.1% as technology stocks came under pressure.
Attention remained fixed on the Strait of Hormuz, a critical route for global energy shipments. While US officials have said commercial traffic will be able to pass through the waterway without tolls by Friday, investors appeared unconvinced that a full return to normal operations would happen quickly.
That uncertainty is feeding directly into concerns about inflation, creating an awkward backdrop for the Federal Reserve’s latest policy meeting. Energy prices have surged during the conflict, contributing to stronger-than-expected inflation readings and raising questions about how policymakers will respond.
Fed officials began their June meeting on Tuesday ahead of Wednesday’s interest rate decision, the first under Chair Kevin Warsh, who was backed by President Donald Trump.
Although markets broadly expect rates to remain unchanged this month, investors are watching closely for any shift in the Fed’s projections. Many on Wall Street believe policymakers could signal a greater likelihood of further rate increases later this year through the central bank’s closely followed “dot plot” forecasts.
Among individual stocks, SpaceX extended its post-IPO surge for a third consecutive session. Shares of Elon Musk’s company moved higher again, helping it overtake Amazon in market value during trading.
Western Digital stood out as one of the day’s strongest performers, rising 7% despite broader weakness across growth and technology names. The data storage specialist added to Monday’s 16% rally after Morgan Stanley lifted its price target to $650 from $488 while maintaining its Overweight rating.
