Nasdaq leads Wall St higher as investors weigh Mideast developments

Wall Street’s main indexes remained stable on Tuesday, as the market recovered from a previous surge fueled by artificial intelligence. Investors, however, remained cautious, keeping an eye on potential negotiations between the United States and Iran, aimed at resolving six months of conflict. Oil prices and the yield on the 10-year Treasury note hovered close to warning thresholds, indicating that investors were awaiting crucial events later in the week.

Brent crude hovered near $100 per barrel, while the 10-year yield was at 4.9%, reflecting investors' anticipation of U.S.-Iran discussions. These talks were anticipated during the United Nations General Assembly meeting, followed by a US-China summit later in the week. UBS analysts expressed hope that such resolutions would ease political uncertainty and bolster the trade truce with China. President Donald Trump was also set to meet with several world leaders.

During market hours, the Dow Jones E-mini rose by 12 points, the S&P 500 E-mini dipped by 6.25 points, and the Nasdaq 100 E-mini fell by 17.5 points. The tech-centric Nasdaq reached a record high on Monday, propelled by Meta's 11.3% gain, as its newly launched Muse AI agent gained traction. Other tech giants like Alphabet, Amazon, and Microsoft also experienced slight gains, while chip stocks, which have benefited the most from the AI trade, faced declines.

Nvidia slipped by 0.2%, while shares of TSMC and SK Hynix dropped over 1% each. The shift in market sentiment was attributed to the early adoption of consumer AI agents, as evidenced by Meta's Muse AI. This development presented new opportunities for monetizing AI beyond enterprise applications, according to UBS. Federal Reserve policymakers were closely monitoring AI demand and the oil crisis as primary drivers of inflation.

Market observers now estimate a 57.6% probability that the central bank would raise interest rates by at least 25 basis points in October, following this month's increase, as indicated by the CME Group's FedWatch Tool. Bitcoin, however, saw a 1.3% decline from a seven-month high, leading to a drop in crypto stocks, including Strategy and Coinbase.