NEW YORK (AP) 鈥 Oil prices are dropping further, and U.S. stocks are pulling close to their all-time high Tuesday on hopes that Israel鈥檚 war with Iran will not damage the global flow of crude, even if a tentative truce seemed to fray under fire in the morning.
The S&P 500 was 1.2% higher in afternoon trading, following up on even bigger gains for stocks across Europe and Asia, after President Donald Trump said late Monday that The main measure of Wall Street's health is back within 1% of its record set in February after during the spring.
The Dow Jones Industrial Average was up 518 points, or 1.2%, as of 1:56 p.m. Eastern time, and the Nasdaq composite was 1.5% higher.
The strongest action was again in the oil market, where a barrel of benchmark U.S. crude fell 5.4% to $64.82. Brent crude, the international standard, dropped 5.5% to $66.62.
The fear throughout the Israel-Iran conflict has been that it could squeeze the world鈥檚 supply of oil, which would pump up prices for gasoline and hurt the global economy. Iran is a major producer of crude, and it could also try to block the off its coast, through which 20% of the world鈥檚 daily oil needs passes on ships.
Oil prices began falling sharply on Monday after Iran launched what appeared to be a limited retaliatory strike that did not target the production or movement of oil. They kept falling even after attacks continued past a deadline to stop hostilities early Tuesday. Trump later said that the
Oil prices have dropped so much in the last two days that they鈥檙e below where they were before the fighting began nearly two weeks ago.
With the global oil market well supplied and the OPEC+ alliance of producing countries steadily increasing production, oil prices could be headed even lower as long as the ceasefire holds and a lasting peace solution can be found, said Carsten Fritsch, commodities analyst at Commerzbank.
Falling oil prices should take some pressure off inflation, and that in turn could give the Federal Reserve more leeway to cut interest rates.
Wall Street loves lower rates because they can give the economy a boost by making it cheaper for U.S. households and businesses to borrow money to buy a car or build a factory. But they could also give inflation more fuel. That latter threat is why the Fed has been this year after lowering them through the end of last year.
The Fed has said repeatedly that it wants to wait and see how much will hurt the economy and raise inflation before committing to its next move. So far, the economy seems to be holding up OK, though a report on on Tuesday than economists expected, while inflation has remained only a bit above the Fed's 2% target.
Trump, though, has been pushing for more cuts to rates. And to the Fed have said in the last week that they may consider cutting rates as soon as the Fed鈥檚 next meeting next month.
Fed Chair . He Tuesday that the Fed is 鈥渨ell positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance.鈥
Asked whether a cut could arrive as soon as July, Powell said, 鈥淲e will get to a place where we cut rates, sooner rather than later 鈥 but I wouldn鈥檛 want to point to a particular meeting. I don鈥檛 think we need to be in any rush because the economy is still strong.鈥
Such mixed messages had Treasury yields swiveling up and down in the bond market. The yield on the 10-year Treasury eased to 4.30% from 4.34% late Monday.
The two-year Treasury yield, which more closely tracks expectations for Fed action, fell to 3.82% from 3.84%.
On Wall Street, cruise operator Carnival steamed 6.7% higher after delivering a much stronger profit for the latest quarter than analysts expected. CEO Josh Weinstein said it's seeing strong demand from people booking cruises close to the departure date, and customers are spending strongly once on board. Carnival also raised its forecast for an underlying measure of profit for the full year.
Uber Technologies rose 7.8% after it said customers in Atlanta can use its app to ride in Waymo autonomous vehicles.
Coinbase Global rallied 11.4% as the cryptocurrency exchange rose with the price of bitcoin, which jumped back above $105,000.
In stock markets abroad, indexes rallied more than 1% everywhere from France to Germany to Japan following the announcement of the Israel-Iran ceasefire. Hong Kong鈥檚 jump of 2.1% and South Korea鈥檚 leap of 3% were two of the strongest moves.
