Major United States benchmark indices finished mixed on Tuesday (Wednesday AEST), with the Dow Jones Industrial Average recording its second consecutive record close while technology stocks pressured the Nasdaq Composite and S&P 500.
The Dow Jones Industrial Average gained 328.6 points, or 0.6%, to finish at 51,999.7. The S&P 500 fell 42.9 points, or 0.6%, to 7,511.4, while the Nasdaq Composite declined 307.6 points, or 1.2%, to 26,376.3.
After rallying strongly on Monday amid optimism surrounding a potential U.S.-Iran peace agreement, investors took profits in large-cap technology shares even as oil prices dropped to their lowest levels since early March.
Market participants rotated into economically sensitive sectors, while semiconductor stocks retreated after posting strong gains over the previous three trading sessions.
SpaceX shares rose 4.8% to close at $201.80 after reaching a record intraday high of $225.64. The rocket and artificial intelligence company ended the session with a market capitalisation exceeding that of Amazon and briefly surpassed Microsoft during morning trade.
U.S. crude futures settled 5.8% lower amid expectations that the deal would extend a fragile ceasefire announced in April by a further 60 days and reopen the Strait of Hormuz, which Iran has effectively blocked since the United States and Israel launched strikes against the country in February.
U.S. President Donald Trump said the agreement would prevent Tehran from obtaining a nuclear weapon, while a U.S. official indicated the deal would permit Iran to resume oil exports upon signing.
Meanwhile, investors widely expect the Federal Reserve to leave interest rates unchanged at its current range of 3.50% to 3.75% at the conclusion of its two-day meeting on Wednesday (Thursday AEST).
Markets will closely scrutinise comments from Federal Reserve Chairman Kevin Warsh regarding inflation, employment conditions and the broader economic outlook.
According to the CME Group FedWatch Tool, traders expect the central bank to keep rates unchanged for much of the year, although markets are pricing in a nearly 42.7% probability of a 25 basis point (bps) rate increase by December, and a 14.7% chance of a 50bp rise.
Among individual stocks, Olin shares fell 5.9% after the chemicals producer announced plans to acquire Huntsman in an all-stock transaction valued at US$2.43 billion.
Huntsman shares dropped 17.1% as investors reacted to an offer price below the company's recent market valuation.
Yum Brands gained 1.9% after the fast-food operator announced plans to sell its Pizza Hut business for $2.7 billion as it seeks to address competitive pressures and softer consumer spending trends.
In bond markets, the yield on the 10-year U.S. Treasury note fell 0.8% to 4.439%, while the two-year Treasury yield declined 0.4% to 4.054%.
