A ceasefire agreement between Washington and Tehran triggers a Dow rally, slashing oil prices and easing inflation concerns ahead of the Fed meeting.
The Dow Jones Industrial Average surged to a record near 52,100 on Tuesday, driven by a ceasefire announcement between the U.S. and Iran. The deal, which includes reopening the Strait of Hormuz and lifting a naval blockade, sent crude oil prices tumbling from their wartime peak, reducing inflationary pressures.
Oil prices had spiked toward $120 in late February after the conflict disrupted roughly a fifth of global supply. The Dow had previously fallen to around 45,000 in April due to inflation fears. With the ceasefire, oil prices retreated to the mid-$70s, easing concerns about aggressive Fed policy.
The Federal Reserve begins its first meeting under new Chair Kevin Warsh on Wednesday, with markets pricing in a dovish shift. However, the ceasefire remains unsigned, leaving risks if the agreement collapses.