Stock market today: Dow, S&P 500, Nasdaq rally as Iran deal optimism offsets Fed hike worries

June 18, 2026 - 20:15

U.S. stocks surged across the board on Tuesday as renewed optimism over a diplomatic breakthrough with Iran outweighed growing concerns that the Federal Reserve may soon raise interest rates. The Dow Jones Industrial Average, the S&P 500, and the Nasdaq all posted strong gains, driven by a sharp drop in crude oil prices.

The catalyst for the rally was news that an interim peace deal between the United States and Iran has officially taken effect. Traders are now betting on the reopening of the Strait of Hormuz, a critical chokepoint for global oil shipments. The prospect of increased supply sent energy prices tumbling, which in turn lifted transportation and consumer stocks.

At the same time, investors digested signals from the Fed that it is leaning toward a rate hike. Recent comments from several policymakers suggested the central bank is prepared to tighten monetary policy to combat persistent inflation. However, the market appeared to shrug off those warnings, focusing instead on the potential for lower fuel costs to cool the economy naturally.

The gains were broad-based, with nine of the 11 S&P 500 sectors closing higher. Energy was the lone laggard, as major oil producers saw their shares slide on the supply news. Analysts cautioned that the rally may be fragile, noting that the Iran deal remains tentative and that the Fed's next move could still rattle markets. For now, though, Wall Street is betting that lower oil prices will buy the economy more time.