Oil prices resumed their rise on Tuesday because of the war with Iran, but US stocks held steadier this time around.
The S&P 500 rose 0.2% to add to its gain from the day before, which was its biggest since the war began. The Dow Jones Industrial Average climbed 46 points, or 0.1%, and the Nasdaq composite rose 0.5%.
It's a break, for now at least, from the usual playbook since the start of the war, where stock prices have tended to go in the opposite direction of oil prices. The fear in financial markets has been that a long-term disruption to the global flow of oil could send prices so high for so long that it damages the global economy. Not only would higher petrol prices sap households' budgets, it could also push companies to pass on their own higher transportation costs to customers.
Oil lifts again
On Tuesday, the price for a barrel of benchmark US crude rose 2.9% to settle at $US96.21. Brent crude, the international standard, climbed 3.2% to $US103.42. But they pared even bigger gains from earlier in the morning, and they're either roughly where they were at the end of last week or below.
Delta Air Lines offered an encouraging signal about the strength of the economy after raising its forecast for revenue for the first three months of 2026. It said it's seen demand for travel, from both businesses and households, accelerate into March.
All told, the S&P 500 rose 16.71 points to 6,716.09. The Dow Jones Industrial Average added 46.85 to 46,993.26, and the Nasdaq composite gained 105.35 to 22,479.53.
US markets stay buoyant
The US stockmarket has a track record of bouncing back relatively quickly from military conflicts in the Middle East and elsewhere, as long as oil prices don't stay too high for too long. Many professional investors are expecting that to be the case again, which has helped keep US stock prices near their record levels.
For all its dramatic swings over the last couple weeks, including several that struck hour to hour, the S&P 500 is less than 4% below its all-time high.
That's even as US Treasury bond yields have climbed on expectations that higher oil prices will prevent the Federal Reserve from cutting interest rates for a while. Higher yields push downward on prices for stocks and all kinds of investments.
The Fed will make its next announcement on interest rates Wednesday afternoon US time, and traders see virtually no chance of a cut.
Cuts to interest rates by the Fed would give the economy and job market a boost, and President Donald Trump has angrily been calling for them. But reductions would also worsen inflation.
In contrast, Australia’s central bank is actually raising interest rates. Citing higher fuel prices, the Reserve Bank of Australia this week announced it would lift the official cash rate to 4.1%.
The Associated Press
