Wall Street tacks on more gains, oil falls on hopes of renewed US-Iran talks

Wall Street was on track to extend its rally and oil prices fell Tuesday as expectations rose over a possible second round of talks between the U.S. and Iran to end their war.

Futures for the S&P 500 rose 0.3% before the opening bell, while futures for the Dow Jones Industrial Average ticked up 0.1%. Nasdaq futures climbed 0.5%.

Investors are still hopeful for a lasting de-escalation of the Iran war, which is in its seventh week, as the U.S. and Iran are said to be weighing a second round of talks before a temporary ceasefire agreement expires next week.

Even amid the optimism for more negotiations, the U.S. declared it had blockaded Iran's ports while Tehran threatened to strike targets across the region. Pakistan said it was racing to bring the sides together for more talks. Two Pakistani officials, who spoke on condition of anonymity because they weren't authorized to discuss the matter with the media, said that the first talks were part of an ongoing diplomatic process rather than a one-off effort.

Though last week's ceasefire appeared to hold, the showdown over the Strait of Hormuz risked reigniting hostilities and deepening the war's economic fallout.

The regionwide conflict has jolted markets and rattled the global economy as a great deal of shipping has been cut off and airstrikes have torn through military and civilian infrastructure across the region.

Oil prices continued to pull back on Tuesday but remain well above where they were in the days before the U.S. and Israel attacked Iran in late February.

Brent crude, the international standard, was down 1.3% to $98.12 per barrel. It reached nearly $104 early Monday morning over Iran war worries on limited progress from the weekend ceasefire talks.

Benchmark U.S. crude fell 2.7% to $96.45 a barrel.

The war in Iran will lead to an annual decline in oil demand for the first time since the pandemic, when billions of people were trying to live in isolation, according to the International Energy Agency.

The agency, formed after the 1974 oil crisis, said Tuesday that oil demand is expected to decrease by an average of 80,000 barrels a day this year, a sharp revision from the increase of 850,000 barrels a day that it had forecast before the war began.

The drop-off in March was particularly severe because of attacks on energy infrastructure and the shutdown of the Strait of Hormuz, according to the IEA, which expects a decline in demand of 1.5 million barrels in the current quarter.

While the biggest cuts in oil usage have initially come from the Middle East and Asia Pacific region, demand destruction is anticipated to spread as oil prices increase and scarcity continues.

U.S. wholesale prices surged last month as the Iran war drove up the cost of energy, the Labor Department said Tuesday. The producer price index — which measures inflation before it hits consumers — rose 0.5% from February and 4% from March 2025. Energy prices surged 8.5% from February.

In equities trading, JPMorgan fell a fraction of 1% after posting another strong quarter of profit. Citing geopolitical tensions, energy price volatility and trade uncertainty, among other factors, CEO Jamie Dimon said bank officials cannot predict how the "increasingly complex set of risks" will play out.

American Airlines jumped more than 9% while United gained nearly 3% on media reports that during a meeting with the White House in February, United CEO Scott Kirby had brought up the idea of a merger between the airlines.

Elsewhere, at midday in Europe, Britain's FTSE 100 rose 0.1%, France's CAC 40 gained 0.8% and Germany's DAX was up 1.1%.

Asian stocks ended higher Tuesday. Tokyo's Nikkei 225 was up 2.4% to 57,877.39. South Korea's Kospi jumped 2.7% to 5,967.75 after briefly topping 6,000 intraday.

Hong Kong's Hang Seng rose 0.8% to 25,872.32, while the Shanghai Composite index climbed 1% to 4,026.63. China on Tuesday reported worse-than-expected export growth of 2.5% in March for the first month since the Iran war began, although some analysts believe Chinese exports of goods related to AI and renewable energy will continue to support overall export momentum for the year.

Australia's S&P/ASX 200 gained 0.5%, and Taiwan's Taiex rose 2.4%.