Pakistan mediators arrive in Iran as U.S.-Iran talks may resume

Wall Street climbed to a record on Wednesday even as the diplomacy around Iran shifted toward a new round of mediation, a split-screen moment that showed how quickly markets can price in relief while the conflict itself remains unresolved. The S&P 500 rose 0.8% and briefly pushed past its prior all-time high set in January, after a sharp rebound that followed a late-March slide of nearly 10% below the record.

The index’s latest surge marked its first closing high since January 27 and came after more than 10% of the lost ground was recovered in just two weeks. Traders were betting that tensions between the United States and Iran might ease, that talks could resume and that a severe disruption to global energy flows through the Persian Gulf, the Sea of Oman and the Red Sea could be avoided. Falling oil prices helped reinforce that view.

At the same time, Pakistan’s Field Marshal Asim Munir arrived in Tehran with Interior Minister Mohsin Naqvi and a Pakistani delegation to continue mediation efforts between Washington and Tehran. Iranian Foreign Minister Abbas Araghchi greeted the group on arrival, underscoring how central Pakistan has become to the effort to keep the dialogue moving after the first round of high-level talks.

Those talks took place in Islamabad on April 11 and 12 and lasted more than 20 hours, making them the most significant direct engagement between the United States and Iran in decades. The White House said any further discussions would likely be held in Islamabad, although no final decision had been made. That leaves the next step still open, but the diplomatic channel is clearly active.

The market reaction reflected more than just hope for a deal. Investors also went into the earnings season with stronger expectations, giving stocks an additional lift. For now, the record in the S&P 500 suggests confidence that escalation can be contained. The visit to Tehran suggests the political work needed to make that bet hold is only beginning.