Falling oil prices, US Fed’s wait-and-see stance support investor optimism worldwide
Dubai: US stocks opened higher on Tuesday as investors welcomed signs of easing geopolitical tensions in the Middle East and a patient approach to interest rate policy from the US Federal Reserve.
The Dow Jones Industrial Average rose 0.7% to 42,895.54 about 25 minutes into trading. The S&P 500 gained 0.8% to 6,070.44, while the Nasdaq Composite Index advanced 1% to 19,835.16, with tech stocks leading the gains.
The positive momentum follows Monday’s rebound, driven largely by a sharp drop in global oil prices, which fell despite fears of regional conflict. Oil markets had initially braced for supply disruptions after Israel and Iran exchanged military strikes. However, US President Donald Trump confirmed on Tuesday that a ceasefire deal between the two countries is now in effect.
The latest military action saw Iran fire missiles at a US base in Qatar, following earlier US airstrikes on Iranian nuclear sites. Crucially, the Iranian strike did not damage any oil infrastructure, helping to ease concerns about supply interruptions from the energy-rich region.
Meanwhile, investors also turned their attention to Federal Reserve Chair Jerome Powell’s remarks to the House Financial Services Committee. In prepared testimony, Powell made it clear that the central bank is not in a rush to cut interest rates, despite calls from President Trump for immediate action.
“For the time being, we are well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance,” Powell said, reinforcing a wait-and-see approach to rate changes.
This position puts the Fed at odds with the White House, as Trump has repeatedly urged the central bank to lower borrowing costs. While two Fed officials have recently expressed openness to potential cuts as early as July, Powell’s remarks suggest a more cautious and data-dependent path.
Together, the easing in geopolitical tensions and the Fed’s balanced policy stance are giving markets reason to remain optimistic. As long as oil prices remain stable and the Fed holds off on sudden policy shifts, investor sentiment is expected to stay resilient in the short term.
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