Wall Street rallies to the edge of its all-time high as oil prices ease

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NEW YORK (AP) — U.S. stocks rallied to the edge of an all-time high Tuesday, and oil prices eased as hopes climbed that the United States and Iran may try again on talks to end their war and avoid a worst-case scenario for the global economy.

The S&P 500 added 1.2% to its leap from the day before, and the index at the heart of many 401(k) accounts is just 0.2% below its record set in January.

The Dow Jones Industrial Average rose 317 points, or 0.7%, and the Nasdaq composite climbed 2%. They followed gains for stock markets worldwide as diplomats worked through back channels to arrange a new round of talks between the United States and Iran.

If talks succeed and the war ends up being only a temporary setback for the global economy, rather than a new normal of very high oil prices and inflation, investors can turn their attention back to what matters most for stock prices: How much money are companies making?

Positive trends there had stock markets worldwide doing well before the war began, and analysts see continued growth ahead, for now at least.

Lower oil prices help bring down costs for all kinds of businesses, and the price for a barrel of Brent crude to be delivered in June fell 4.6% to settle at $94.79 Tuesday.

While that’s still above its roughly $70 price from before the war began in late February, it’s well below the $119 peak it has hit when worries about the war have been at their heights.

To be sure, hope has often swung quickly into doubt since the war began, which has caused extreme and sudden reversals in financial markets. Much of the stress has been due to the Strait of Hormuz, a narrow waterway that’s the main avenue for crude oil produced in the Persian Gulf area to reach customers worldwide. Blockages there have kept oil off the global market, which has in turn driven up its price.

And that has meant a blast of higher inflation. In the United States, inflation at the wholesale level accelerated to 4% in March from 3.4% the month before, according to the latest data released Tuesday. That was actually better than the 4.6% rate economists expected.

The effect is worldwide. Global inflation this year looks set to accelerate to 4.4% from 4.1% in 2025, according to the International Monetary Fund, which had earlier thought inflation would slow to 3.8%.

The IMF on Tuesday also downgraded its forecast for global economic growth to 3.1% this year from the 3.3% it had forecast in January.

On Wall Street, strong profit reports from companies are helping to make up for such worries. Over the long term, stock prices tend to follow the path of corporate profits, and analysts are forecasting S&P 500 companies will report solid growth of more than 12% for the most recent quarter, according to FactSet.

Optimism remains high enough that analysts have raised their estimates since the war began for S&P 500 profits over the first six months of the year, according to strategists at Morgan Stanley.

BlackRock gained 3%, and Citigroup rose 2.6% Tuesday after the financial companies reported stronger profit and revenue for the latest quarter than analysts expected.

JPMorgan Chase likewise delivered a better-than-expected quarter, but its stock dipped 0.8% as CEO Jamie Dimon said bank officials cannot predict how the “increasingly complex set of risks” will play out given so much uncertainty.

Amazon climbed 3.8% after saying it would buy Globalstar, a mobile satellite services company, for $90 per share in either cash or Amazon stock. Globalstar jumped 9.6%.

Software companies also rallied for a second day, recovering more of their sharp losses from earlier in the year on worries they could be made obsolete by artificial-intelligence technology. AppLovin rose 3.9%, and an ETF from iShares tracking the software industry added 1%.

That in turn helped private-credit companies recover. These companies have lent money to software businesses and others that may be under threat from AI, and some have seen a rush of investors trying to pull out their money.

Blue Owl Capital rose 8.5% to trim its loss for the year so far below 39%. Ares Management climbed 5.6%, and Apollo Global Management rose 4.4%.

They helped offset a 5.7% drop for Wells Fargo, which reported weaker revenue for the latest quarter than analysts expected.

All told, the S&P 500 rose 81.14 points to 6,967.38. The Dow Jones Industrial Average gained 317.74 to 48,535.99, and the Nasdaq composite climbed 455.35 to 23,639.08.

In stock markets abroad, indexes rose across much of Europe and Asia. South Korea’s Kospi jumped 2.7%, and Japan’s Nikkei 225 rose 2.4% for two of the bigger gains.

In the bond market, Treasury yields eased as the fall for oil prices took some of the pressure off inflation. The yield on the 10-year Treasury fell to 4.25% from 4.30% late Monday.

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AP Business Writers Chan Ho-him and Matt Ott contributed to this report.