Stocks opened higher Tuesday after the United States and Iran signed a memorandum of understanding to lock in their ceasefire and reopen the Strait of Hormuz, sending oil prices lower and pushing the Dow Jones Industrial Average further into record territory. Investors are also looking ahead to the Federal Reserve, which wraps up its policy meeting this week.

In the opening minutes of trading, the Dow rose about 0.8%, building on Monday’s record close of 51,671. The S&P 500 added 0.1% to hover near 7,560, while the tech-heavy Nasdaq Composite was little changed around 26,690 after Monday’s strong run. The small-cap Russell 2000 climbed 0.7%, moving closer to the 3,000 mark it has been flirting with for days.

The morning’s main event was the signed agreement between Washington and Tehran. Brokered by Pakistan, the deal locks in a halt to the fighting that began in late February, reopens the Strait of Hormuz to oil tankers, and establishes 60 days of talks over Iran’s nuclear program. A formal signing ceremony is planned for Friday in Switzerland. The prospect of Persian Gulf oil flowing freely again has been the single biggest force moving markets this week.

Not every number pointed higher. A government report showed that new home construction unexpectedly tumbled in May. Housing starts fell 15.4% to an annual pace of 1.18 million, the slowest level since May 2020 and well below economists’ expectations. A separate gauge of homebuilder confidence also slipped Monday. High mortgage rates and the prolonged period of elevated energy prices have weighed on builders, a reminder that parts of the economy remain under pressure even as stocks sit at record highs.

Market Movers

Shares of SpaceX jumped about 13% Tuesday morning to roughly $218, adding to their gains from the first full day of trading and pushing the company’s market value above $2 trillion. The company said Tuesday it will acquire Anysphere, the artificial intelligence startup behind the popular Cursor coding tool, for $60 billion in an all-stock deal expected to close in the third quarter.

The stock is now up more than 56% from its $135 offering price last week. Brian Mulberry, chief market strategist at Zacks Investment Management, described the company’s debut as more orderly than he expected, suggesting demand has been steady rather than frenzied.

The day’s laggards were scattered across industries. Chemical maker Huntsman fell about 6%, hotel operator Hilton Worldwide dropped roughly 5%, and chipmaker Qorvo slid nearly 4%. Payments company Fiserv also remained under pressure following recent leadership changes.

Commodities

Oil did the heavy lifting on the downside, which for consumers is welcome news. Brent crude traded around $81 a barrel Tuesday morning, down about $3 from the previous day, while West Texas Intermediate hovered near $80.

Crude has now fallen more than 20% over the past month and sits at a two-month low as traders bet that the reopening of the Strait of Hormuz will bring previously stranded supplies back to the market.

The decline comes with a caveat. Neither side has released the full text of the agreement, and shipping companies are still holding vessels back from the strait until firmer guarantees emerge. That uncertainty has helped keep a floor under prices for now.

Even so, relief is already beginning to reach consumers. GasBuddy analyst Patrick De Haan noted that the national average price of gasoline has started to decline after months of elevated prices at the pump.

The Forward Look

The next two days could set the tone for markets. The Federal Reserve concludes its meeting this week, and investors are looking for clues on how policymakers view an economy facing cooling inflation, a soft housing market, and a sudden drop in energy costs.

Friday’s formal signing ceremony in Switzerland is the other key event. If it proceeds smoothly and oil tankers begin moving freely through the Strait of Hormuz, crude prices could fall further, bringing additional relief to drivers and businesses alike.

For now, Wall Street remains optimistic. The combination of a winding-down war, lower energy costs, and a blockbuster technology deal has stocks hovering near record highs. Whether that momentum continues may depend on the Fed’s message—and whether the fragile peace with Iran develops into a lasting one.

JBizNews Desk

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