U.S. stocks opened higher Tuesday as investors took comfort from easing oil prices and signs that tensions between Washington and Tehran could cool in the days ahead. The Dow Jones Industrial Average rose 0.3% at the open, while the S&P 500 gained 0.5% and the Nasdaq Composite added 0.8%.
The move followed Monday remarks from President Donald Trump, who said negotiations with Iran were “moving along well” even as he said the United States was still prepared to act militarily if the talks collapsed. The market got another lift from crude, with West Texas Intermediate falling 3% to $92 per barrel and Brent slipping roughly 4% to $96 per barrel, after a week in which U.S. oil dropped 8.4%, its steepest weekly decline since mid-April.
That backdrop mattered because traders had been worried that a wider conflict could keep energy prices elevated and complicate expectations for Federal Reserve rate cuts. By Tuesday, futures pricing pointed to an 8.5% chance of a Fed rate hike in July, up from 0.9% a month earlier, underscoring how quickly bets on policy can shift when oil and geopolitics move together. The rally came after markets were closed on Monday for Memorial Day, so the opening price action had the feel of a delayed response to a volatile holiday stretch. A similar pattern had helped lift shares before, as lower crude prices fed into the previous week’s rally.
The broader tension has not disappeared. The United States and Iran exchanged fire in the Strait of Hormuz, the U.S. said it carried out self-defense strikes in southern Iran, and the Islamic Revolutionary Guard Corps fired at a U.S. aircraft and drones. Those events left traders watching for whether diplomacy can hold before the market has to absorb another escalation. Related coverage has tracked how the Dow Jones Industrial Average has repeatedly swung on oil and Iran headlines, and Tuesday’s opening move fits that pattern.
Chip stocks added a separate tailwind. Micron opened at a record intraday high after UBS more than tripled its price target to $1,625, a call that implied roughly 115% upside from Friday’s close and a market value near $1.8 trillion. At that level, Micron would rank as the seventh-biggest U.S. company, ahead of Tesla, Meta and Berkshire Hathaway. The shares surged more than 10% in early trading and logged their 30th intraday all-time high of the year, while the PHLX Semiconductor Index hit a record after the opening bell. Marvell, AMD, Lam Research, Qualcomm and ON Semiconductor also gained as the chip rally widened.
Bond markets echoed the softer risk tone, with the 10-year Treasury yield falling 7 basis points to 4.47%. For now, the market is treating lower oil and a less hostile tone between Washington and Tehran as enough to keep buyers in control, even if the next turn in the talks could quickly change the mood again.
