U.S. stock markets surged to record highs on Tuesday, with the Dow Jones Industrial Average and the S&P 500 each climbing approximately 1.7 percent, while the Nasdaq saw a 2.6 percent increase. This rally followed signals from the Trump administration that a deal with Iran regarding the Strait of Hormuz could be imminent, potentially concluding "today or tomorrow."
Treasury Secretary Scott Bessent stated in an interview that "We are in talks with the Iranians" and expressed optimism about reaching an agreement that would allow for increased maritime traffic. The announcement led to a sharp decline in oil prices, with West Texas crude dropping about 6 percent from $80 per barrel to around $75.80.
Bessent suggested that a potential deal could alleviate congestion in the Strait of Hormuz, where hundreds or potentially over a thousand ships are awaiting passage. He indicated that this would facilitate the movement of goods, including energy, fertilizer, and industrial products, to global markets, potentially leading to lower consumer prices in the U.S.
These developments follow President Donald Trump's decision to call off a planned retaliatory strike against Iran over the weekend. Trump stated that he canceled the offensive after regional leaders, including those from Saudi Arabia, the UAE, and Qatar, requested he hold off on strikes to allow negotiations to resume. Bessent noted that Trump's threat of significant military action may have encouraged Iran to return to the negotiating table, particularly after a previous memorandum of understanding failed to hold following Iranian missile launches at U.S. forces.
The U.S. military faces concerns regarding its weapon stockpiles amid ongoing operations in the Middle East. Reports indicate that the U.S. Army has depleted nearly its entire inventory of offensive precision missiles, such as ATACMS and PrSM, a situation described as a "staggering new low" by officials familiar with the data. Additionally, supplies of interceptor missiles used to defend against Iranian drone and missile attacks are reportedly dwindling, raising concerns about the ability to protect U.S. troops in the region. Since February, 18 U.S. service members have died and over 100 have been injured in operations in the Middle East. Iranian Ministry of Health reports from June indicated that over 3,400 people in Iran have been killed and more than 26,500 injured by U.S.-Israeli strikes since February 28.