Oil prices fell below $80 per barrel on Tuesday for the first time since early March, continuing a sharp decline from recent levels above $100. This drop occurred amid cautious optimism over a tentative U.S.-Iran agreement that could lead to the reopening of the Strait of Hormuz, a critical oil shipping route, potentially easing global supply constraints. Despite ongoing negotiations facing significant challenges, including Iran's nuclear program, investors are hopeful the deal could offer a long-term resolution to a conflict that has contributed to inflationary pressures worldwide.

In U.S. stock markets, trading was mixed as indexes hovered near all-time highs. The Standard & Poor’s 500 index slipped 0.6%, closing 42.94 points lower at 7,511.35, and ended 1.3% below its record high set earlier this month. The Dow Jones Industrial Average advanced 328.64 points, or 0.6%, to a record 51,999.67 for the second consecutive day. By contrast, the tech-heavy Nasdaq composite declined 1.2%, falling 307.60 points to 26,376.34.

The decline in the Nasdaq was largely driven by losses in major technology companies linked to the artificial intelligence sector. Shares of Nvidia dropped 2.4%, Broadcom fell 4.4%, and Micron Technology decreased 6.2%. These chipmakers and memory producers, having grown substantially during the AI boom, have become influential market components whose recent volatility has weighed on broader indexes. Some market observers attribute the shifts to concerns over inflated stock valuations following intense enthusiasm for AI-related equities.

Beyond the tech sector, Dave & Buster’s Entertainment shares fell 6.2% after reporting weaker-than-expected quarterly profits. Robinhood Markets also declined 1.4% after announcing plans to reduce its full-time workforce by about 10%. Conversely, SpaceX’s shares rose 4.8% for a third consecutive session following its announcement to acquire Cursor, an AI coding assistant, in a deal valuing the company at $60 billion. Yum Brands increased 1.9% after revealing it would sell the Pizza Hut chain for $2.7 billion, with private equity firm LongRange Capital purchasing most U.S. locations and Yum China Holdings acquiring outlets in mainland China.

Globally, stock markets showed varied performance. European indexes recorded gains, while Asian markets closed mixed. Japan’s Nikkei 225 briefly surpassed 70,000 points for the first time before finishing with a modest 0.1% increase, aided by the Bank of Japan’s decision to raise its benchmark interest rate to 1%, the highest level in three decades. This move followed a similar rate hike by the European Central Bank last week.

Meanwhile, the Federal Reserve commenced a two-day meeting to determine interest rate policy, with an announcement expected on Wednesday. This marks the first meeting under new Fed Chair Kevin Warsh, nominated by President Donald Trump. The current expectation among analysts is that the Fed will maintain existing rates, despite Trump’s public calls for cuts intended to stimulate the economy, a move some warn could exacerbate inflation.

In bond markets, the yield on the 10-year Treasury note declined to 4.43% from 4.47% late Monday. Elevated bond yields driven in part by recent high oil prices have raised borrowing costs, contributing to slower economic activity and dampening asset prices, including stocks and cryptocurrencies. Higher mortgage rates have affected the housing sector, where recent data showed a significant drop in new home construction starts in May compared to economists’ forecasts.