Easing US-Iran tensions and reduced Fed tightening bets drive the index to record levels ahead of key inflation data.
The S&P 500 surged to a record high, closing above 7,800, as geopolitical risks eased following reports of a potential US-Iran agreement. Markets opened higher after the US called off planned strikes, while Qatari mediators confirmed draft language for a deal involving the Strait of Hormuz.
Prior to this rally, the index had traded in a tight range, with investors weighing inflation concerns and Federal Reserve policy. Reduced expectations for aggressive rate hikes further fueled the advance, though gains were trimmed late Tuesday as the anticipated deal timeline passed without confirmation.
Attention now shifts to next week’s US CPI report, which will influence the Fed’s September decision. A stronger-than-expected print could reignite rate hike fears, while softer data may extend the rally.