Wall Street rallies on hopes for U.S.-Iran peace deal
Investors pushed stocks higher even as fighting continued, betting U.S.-Iran talks could reopen the Strait of Hormuz and cool oil prices.
Investors were still buying the peace story even as violence flared, a sign of how quickly Wall Street can turn a war headline into a tradable bet. On June 4, the Dow Jones Industrial Average rose 877 points, or 1.7%, to 51,564 in afternoon trading, while the S&P 500 gained 0.5% and the Nasdaq Composite added 0.2% as traders leaned into hopes that U.S.-Iran talks could end the conflict and ease pressure on energy markets.
That optimism had already lifted stocks earlier in the week, even though the war was in its fourth month and the diplomatic picture remained unstable. On June 1, U.S. President Donald Trump said talks with Iran continued, and investors took fresh reports of possible Pakistani mediation as another sign that a settlement might be within reach. Secretary of State Marco Rubio said there were “some good signs,” though he also cautioned against reading too much into the talks. At the same time, Iran’s news agency said Tehran was halting indirect negotiations after a new round of strikes, and Iranian Foreign Minister Abbas Araghchi said Wednesday that “no tangible progress” had been made.
The market’s wager has centered on oil. Brent crude fell to $94.43 a barrel and U.S. West Texas Intermediate slipped to $92.18 after earlier gains, suggesting traders think a deal this month could reopen the Strait of Hormuz to oil tankers and keep a lid on prices. That view has held despite renewed violence, including an attack this week by Iran on Kuwait International Airport and U.S. strikes on an Iranian island near the Strait of Hormuz. The contrast has been stark: missiles and retaliation on one side, lower oil premiums and higher equity prices on the other.
The rally, however, was not broad-based. Investors also trimmed exposure to artificial intelligence stocks, a sign that the sector’s long run may be losing momentum even as some tech names still helped carry the market. Nvidia jumped 6.3% on June 1 after unveiling a new chip for AI PCs, but Qualcomm fell 8.8% and Intel dropped 4.7%. For now, Wall Street is treating peace as a near-term catalyst rather than a settled outcome, and that makes the market vulnerable if the diplomacy stalls or the fighting intensifies again.
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