By Johann M Cherian and Tharuniyaa Lakshmi
Sept 22 (Reuters) - The tech-heavy Nasdaq hit an intraday record high for the first time since early June on Tuesday, underpinned by strong gains in Gemini-parent Alphabet, while optimism over potential U.S.-Iran talks boosted broader market sentiment.
A senior Iranian official told Reuters that Tehran could reopen the Strait of Hormuz within seven days if the US eases pressure. Saudi Arabia also restarted operations at its East-West Pipeline, according to three
sources.
Brent crude eased 1.2% following the latest developments, but was still within reaching distance of $100 a barrel, while the yield on the benchmark 10-year Treasury note was at 4.9% - both hovering near levels that weighed on markets in recent days.
"Markets are really seeing oil as the key macro variable here, where both interest rates and the broader market are very much correlated to what's happening in oil and on the geopolitical front," said Lale Akoner, global market strategist at eToro.
US-Iran talks are expected on the sidelines of this week's United Nations General Assembly meeting, followed by a US-China summit on Thursday. Traders hope it will yield a resolution on the Middle East conflict and extend the trade truce with Beijing. President Donald Trump is also scheduled to meet several world leaders later in the day.
At 09:58 a.m. ET, the Dow Jones Industrial Average fell 57.87 points, or 0.11%, to 51,990.96, the S&P 500 gained 5.59 points, or 0.07%, to 7,770.29 and the Nasdaq Composite gained 109.38 points, or 0.40%, to 27,231.48.
SPOTLIGHT ON MAG 7
Alphabet gained 2% and drove a 1.2% rise in the S&P 500 Communication Services sector. Meta edged up 0.5% and added to Monday's 11% jump as investors bet on its new AI agent Muse that analysts said could open a new revenue stream for the social media giant.
"The market got credible confirmation that its monetization is on track with its AI agent, which has boosted confidence that Meta could finally be turning its huge AI spending into products that consumers will use," said Akoner.
Other Magnificent Seven stocks including Apple and Tesla were also marginally higher.
On the flip side, chip stocks that have been the biggest beneficiaries of the AI trade this year were lower: Texas Instruments lost 1%, Broadcom dipped 0.6% and Nvidia was flat.
Federal Reserve policymakers consider AI demand and the oil shock as key inflation drivers. Traders now see a 53.1% chance the central bank will increase interest rates by at least 25 basis points in October, following this month's hike, the CME Group's FedWatch Tool showed.
Boston Fed President Susan Collins wrote she supported last week’s central bank interest rate increase amid the risks that future inflation will be above its 2% target.
Remarks from at least three central bankers — Fed Vice Chair Philip Jefferson, New York Fed President John Williams and Richmond Fed President Thomas Barkin — are expected later in the day.
Among others, Amgen rose 2.3% after the drugmaker said its experimental treatment for Sjogren's disease met the main goal of reducing disease activity in a late-stage trial.
Advancing issues outnumbered decliners by a 1.62-to-1 ratio on the NYSE and by a 2.02-to-1 ratio on the Nasdaq.
The S&P 500 posted three new 52-week highs and nine new lows while the Nasdaq Composite recorded 24 new highs and 40 new lows.
(Reporting by Johann M Cherian in Bengaluru; Editing by Joyjeet Das and Devika Syamnath)
