MW S&P 500 nears record as stocks soar, oil sinks and investors throw caution to the wind

By William Watts

'The geopolitical premium is plunging' as Israel-Iran cease-fire erases fears of an oil shock

Everything's coming together for stock-market bulls, with the S&P 500 ending Tuesday on the cusp of record territory as investors celebrated an Iran-Israel cease-fire that served to erase a June surge in crude prices and any lingering fears of a summer oil shock.

Investors naturally fear too much of a good thing, but stock-market bulls were finding little reason to hesitate Tuesday as the S&P 500 pushed to the cusp of record territory after Iran and Israel agreed to a cease-fire.

Expectations the Iran-Israel conflict will remain on ice saw crude futures tumble, erasing the June rally sparked by the fighting and erasing fears of a summer energy shock. Animal spirits were on display as investors dumped safe-haven gold (GC00). Putting a cherry on top, Treasurys rallied, pulling down yields BX:TMUBMUSD10Y, as plunging oil prices helped cool inflation fears and Federal Reserve Chair Jerome Powell at least left the door open to the prospect of faster rate cuts if inflation data cooperates, noted Jose Torres, senior economist at Interactive Brokers.

"The geopolitical premium is plunging, as crude oil and gold prices dive on a reduced need for safe-haven assets," he said in a note.

The S&P 500 SPX finished with a gain of 67.01 points, or 1.1%, at 6,092.18, just 0.9% below its record finish of 6,144.15 set on Feb. 19, while the tech-concentrated Nasdaq-100 NDX returned to record territory. The Dow Jones Industrial Average DJIA rose over 500 points, or 1.2%.

West Texas Intermediate crude for August delivery (CL.1) (CLQ25), the global benchmark, dropped 6% to close at $64.37 a barrel on the New York Mercantile Exchange, its lowest finish since June 5 bringing its decline over the past three sessions to 14.3%, according to Dow Jones Market Data.

Fears around the Israel-Iran war centered on the danger of a wider conflict that could endanger flows of Middle Eastern crude, putting a heightened focus on the Strait of Hormuz, a crucial waterway that accounts for around a fifth of seaborne oil trade and long seen as vulnerable to Iranian retaliation. Those fears surged after President Donald Trump ordered a U.S. bomb attack on three Iranian nuclear reactors Saturday.

But those fears abated by Monday afternoon following an Iranian missile attack on a U.S. military base that was telegraphed well in advance and was viewed by observers as largely a symbolic response designed not to invite another round of U.S. attacks. Trump's announcement of a cease-fire deal, though it appeared shaky early Tuesday, saw investors fully put fears behind them.

Will the cease-fire hold? It isn't a sure thing. Washington Analysis, CFRA's policy-analysis arm, sees a 55% chance it remains in place, said Aniket Ullal, head of ETF research at CFRA, in a Tuesday note.

And that isn't the only riskk, with the July 9 deadline for the end of thepause on reciprocal tariffs approaching fast, Ullal wrote.

But the cease-fire euphoria was also lifting hopes for a favorable outcome on tariffs, analysts said.

"Shall the truce hold, it has the potential to significantly boost confidence and trust in President Trump's ability to quell violence around the world and may even offer Washington leverage as we approach the July 9 deadline for trade deals," wrote Torres at Interactive Brokers.

In turn, that could bolster prospects for passage of the controversial, Republican-backed tax-and-spending bill, he said. Though it would likely be criticized for a lack of spending cuts, passage would probably spark rallies in risky assets and cyclical commodities "while being conducive to economic reacceleration because it will motivate capital expenditures, hiring and consumption."

Time will tell. But for now, the market has declared that escalation between Israel and Iran is off the table, said Louis Navellier, founder of Navellier & Associates, in a note.

He observed the Cboe Volatility Index VIX, often referred to as Wall Street's fear gauge, has dropped below 18, under its long-term average, while crude is back down to $65 a barrel and all major stock indexes opened above their closing level on June 11, before Israel's surprise attack on Iran occurred.

"Yet another example of why the market doesn't seem to take geopolitical risks very seriously," he said.

-William Watts

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June 24, 2025 17:59 ET (21:59 GMT)

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