Oil prices turn lower as Bessent says U.S. may have Iran deal "today or tomorrow"

Investing.com -- Wall Street on Tuesday broke out of the gate and hit a new record high, buoyed by a decline in oil prices and bond yields, following a string of potentially positive headlines on Middle East peace talks.

Investors are also looking forward to the much-anticipated first quarterly report from Elon Musk’s SpaceX after the closing bell.

At 09:32 ET (13:32 GMT), the benchmark S&P 500 index rose 0.6% to 7,642.66 points, scaling a fresh all-time intraday high for the first time since June 2. The blue-chip Dow Jones Industrial Average also topped a new high for the first time since July 7, surging 1.4% to 53,934.14 points. The tech-heavy NASDAQ Composite advanced 1.1% to 26,189.98 points. Get more insights on Wall St and the AI trade by subscribing to InvestingPro - now 55% off

Equities on Wall Street equities have soared in the first trading session of August on Monday, with sentiment aided by a sharp drop in oil prices fueled by fresh hopes for a diplomatic breakthrough in the Iran war. Technology stocks also rebounded from losses notched in the prior month, although traders flagged ongoing worries around the sustainability of massive spending on artificial intelligence infrastructure like data centers and chips.

On Tuesday, U.S. Treasury Secretary Scott Bessent told CNBC that he believed the U.S. and Iran were nearing an agreement, noting that "there is a chance we may have a deal today or tomorrow" to open the Strait of Hormuz and "move towards a more normalized position in this conflict."

Elsewhere, Qatar said a push to forge a diplomatic resolution to the Iran war is ongoing, with the efforts focused on de-escalation and the reopening of the Strait of Hormuz, according to media reports.

The Gulf country, which has served as a regional mediator between Iran and the U.S., reportedly added that language on a possible deal has been drafted and is being circulated among negotiators. While there is currently no agreement to hold direct talks, a short-term resolution is the focus for Qatar, the reports said.

Oil prices erased earlier gains in the wake of the reports. Brent crude futures, the global oil benchmark, were last down 4.1% to $80.32 a barrel, after having gained more than 2.5% earlier. U.S. West Texas Intermediate (WTI) crude futures dropped 4.7% to $76.51 a barrel.

Along with a new strike on a ship in the Strait of Hormuz on Tuesday, investors have been assessing conflicting signals from the U.S. and Iran on negotiations over the reopening of the channel, reviving concerns that persistent crude supply disruptions in the Middle East could spark a burst of inflation and central bank interest rate hikes.

But the slide in oil prices may soothe some of these fears. Benchmark U.S. 10-year Treasury yields, which tend to move inversely to prices and can be a gauge for rate expectations, fell.

Earlier in the week, U.S. President Donald Trump asserted that revived talks with Iran would soon start, although Iranian Foreign Minister Esmail Baghaei denied that any such dialogue was taking place. Trump responded by calling Iranian leadership "unbelievably duplicitous."

Tehran did confirm that talks with Oman were ongoing over the status of the Strait of Hormuz. But traffic through the vital waterway was scant, while military tensions in the Gulf remained heightened.

SpaceX earnings, payrolls data awaited this week

Beyond the Iran war, much of the focus this week is squarely on a host of major earnings, as well as key payrolls data for July.

SpaceX is due to report after the close of U.S. markets on Tuesday, in what will be the rocket maker’s first earnings report since its blockbuster public debut in June.

AMD will also unveil returns after the bell, with investors keen to see if the chipmaker provides a glimpse into the state of the AI boom.

In premarket trading, shares of Palantir jumped after the data analytics firm raised its full-year financial forecast and announced sharp growth in U.S. commercial sales. Short-form video app maker Snap’s shares also spiked on a narrower quarterly loss.

Later this week, traders will turn their attention to the U.S. jobs report for July, which may provide fresh insight into both the wider economy and the path of interest rates.

Ambar Warrick and Scott Kanowsky contributed to this article

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