The Evolution of the Stock Market: Trends to Watch Now

Tech stocks soar to record highs as geopolitical tensions ease; oil tumbles, but caution lingers.

Key takeaways

• U.S. stocks rallied after a ceasefire between Israel and Iran, with the Nasdaq 100 hitting a record high.

• Investor optimism was further fueled by Fed Chair Powell’s comments suggesting possible rate cuts.

• Oil prices dropped sharply as fears of Middle East supply disruptions faded, but geopolitical risks remain.

Markets surged Tuesday following the announcement of a ceasefire between Israel and Iran, a development that soothed investor anxieties after more than a week of heightened geopolitical tension.

The Nasdaq 100 led the rally, closing at a record high, while the S&P 500 ended just shy of its all-time peak.

Investors responded positively to President Donald Trump’s announcement late Monday that he had brokered a ceasefire between the two nations.

Despite Trump's own continued expressions of concern and a series of social media posts on Tuesday urging Israel to adhere to the agreement, market optimism held firm throughout the trading session.

Traders were also buoyed by remarks from Federal Reserve Chair Jerome Powell, who indicated the possibility of interest rate cuts if inflation remains contained.

“If it turns out that inflation pressures do remain contained, then we will get to a place where we cut rates, sooner rather than later,” Powell told lawmakers, though he stopped short of specifying a timeline.

Indexes Surge on Ceasefire and Rate Cut Hopes

At the close of trading Tuesday:

S&P 500 rose 1.1% to 6,092.22

Dow Jones Industrial Average jumped 1.2%, or 507 points, to 43,089.02

Nasdaq 100 climbed 1.5% to a record 22,190.52

The Nasdaq 100 has now rallied nearly 3% this week, as investors move back into risk-on mode.

Oil Retreats as Geopolitical Risk Premium Fades

Oil markets, which had spiked on fears of supply disruption, reversed sharply. Brent crude fell as much as 7% during the day before recovering some ground in after-hours trading, last seen up 1.4% at $68.09 per barrel. US West Texas Intermediate crude mirrored that move, down 7% intraday before rising to $65.31.

Still Watching for Re-escalation

While markets welcomed the truce, analysts warned that the calm could be temporary.

“Markets breathed a sigh of relief following Trump's ceasefire declaration, but the celebration could be short-lived,” said Lukman Otunuga, senior market analyst at FXTM. “If tensions flare again or the ceasefire is violated, we could see a swift return to risk aversion.”

Oxford Economics analysts noted that in a downside scenario, a breakdown in negotiations could see Iran attempting to disrupt regional trade routes, heightening risks once more.

Other Notable Market Moves

US Dollar Index edged up to 97.906 (+0.05%)

Bitcoin rose 1.4% to $105,568.44

Gold climbed 0.2% to $3,331.15

Underlying Fundamentals Remain Stable,For Now

Despite the geopolitical shock, analysts say the broader economic backdrop remains resilient.

“The fundamentals are still intact,” wrote Daleep Singh, chief global economist at PGIM Fixed Income. However, he warned that the long-term outlook could change significantly if tensions with Iran escalate into a nuclear threat.

For now, with immediate fears abating, markets are back in rally mode, though with one eye still on the horizon.