United States equity markets closed modestly higher on Tuesday (Wednesday AEDT), as investors balanced a rebound in risk sentiment against rising oil prices and ongoing geopolitical tensions linked to the Iran conflict.
The Dow Jones Industrial Average added 46.9 points or 0.1% to close at 46,993.3, the S&P 500 rose 16.7 points or 0.3% to finish at 6,716.1, while the Nasdaq Composite gained 105.4 points or 0.5% to 22,479.5.
Markets extended gains from the previous session as the Federal Reserve commenced its two-day policy meeting, with investors closely monitoring the outlook for interest rates amid persistent inflation risks driven by higher energy costs.
Oil prices remained a key driver of sentiment, with Brent crude climbing 3.2% and settling at US$103.42 per barrel.
Shares of Uber Technologies surged 4.2% after the company announced plans to roll out robotaxi services in 28 cities next year, powered by autonomous driving software from Nvidia.
Financial stocks also recovered after recent weakness tied to concerns over private credit quality. Asset managers posted notable gains, with Blackstone up 4.6%, Apollo Global Management climbing 5.3%, and KKR advancing 3.3%.
In contrast, Honeywell International slipped 1.3% after warning that the Middle East conflict could weigh on first-quarter revenue.
Meanwhile, Eli Lilly dropped nearly 6% following a downgrade from HSBC.
Energy stocks led sector gains, with oil producers Occidental Petroleum and ConocoPhillips up 0.8% and 1.3% respectively, tracking higher crude prices.
Geopolitical developments continued to influence markets. Donald Trump indicated that plans for a coalition to protect shipping in the Strait of Hormuz were still under consideration, but later stated that the United States did not require assistance from NATO or other allies.
“Fortunately, we have decimated Iran’s Military,” Trump said in Truth Social post. “Because of the fact that we have had such Military Success, we no longer ‘need,’ or desire, the NATO Countries’ assistance — WE NEVER DID.”
Equities pared earlier gains following the comments, while oil prices edged higher, suggesting investors had been hoping for a coordinated international response to secure shipping routes.
Oil has surged since the onset of U.S.-Israel strikes on Iran, amid fears that prolonged disruption in the Strait of Hormuz could significantly impact global energy supply.
Investors are also monitoring further escalation risks after reports that Iranian security chief Ali Larijani was killed in recent airstrikes, according to Israeli officials.
On the bond markets, yields were mixed. The 10-year Treasury yield fell 0.5% to 4.2%, while the 2-year yield rose 0.1% to 3.678%.
