Dow closes at a record as Trump calls off Iran strike and oil slides — August 4, 2026

Top U.S. Stories

• President Trump said he called off a planned strike on Iran after a request from Tehran and other countries in the region, adding that an understanding on reopening the Strait of Hormuz was in place and that denuclearization talks would begin Monday afternoon. Why it matters: Hormuz carries a large share of the world’s seaborne crude. Even the expectation of it reopening was enough to knock roughly 5% off oil in a single session, which in turn cooled inflation worries across every other market.
• Trump also framed the renewed negotiations as Iran’s “last chance” to reach a decent deal, while Iran’s foreign ministry said its only active channel is with Oman over safe passage for shipping. Why it matters: The gap between Washington’s optimism and Tehran’s public position is wide. Monday’s rally was priced on the optimistic reading — a stall in talks would unwind the same chain in reverse.
• The Dow Jones Industrial Average closed at a record 53,178.41, up 693.38 points (1.32%), passing the previous high set on July 6 by 122.50 points.
• Amazon rose more than 4% to reach a $3 trillion market capitalization for the first time, with Meta up 6%, Microsoft and Alphabet up about 5% each, and Nvidia up 3%.
• The United States joined Japan in a coordinated yen-buying intervention executed on July 31 and disclosed on August 3 — the first joint action of its kind in 15 years. Why it matters: Washington rarely intervenes in currency markets. Participating signals that the dollar’s strength against the yen had reached a level both governments saw as destabilizing rather than merely inconvenient.

Markets

Stocks rallied broadly on Monday. The S&P 500 gained 1.48% to close at 7,600.50 and the Nasdaq Composite added 2.1% to 25,913.9, alongside the Dow’s record close. WTI crude fell about 5% to $80.34 a barrel, pressured both by the Iran news and by OPEC+ agreeing to raise September output by 188,000 barrels per day, completing the unwind of its 2023 voluntary cuts. Falling oil pulled Treasury yields down with it.

In Tokyo, the picture was the mirror image. The Nikkei 225 fell 607.12 points (0.94%) to 63,754.90, its first decline in three sessions, as the intervention drove the yen from near 164 per dollar — a roughly 40-year low touched in late July — to around 155.22 intraday before settling in the upper 156 range.

Stocks in Focus

• Megacap tech — six names accounted for roughly 87% of the Dow’s advance. The move was driven by rate expectations rather than earnings news: cheaper oil means less inflation pressure, which means lower yields, which mechanically raises the present value of long-dated tech earnings.
• Japanese exporters — automakers, rubber and steel shares led declines in Tokyo on the stronger yen. For companies with large overseas revenue, a few yen of appreciation can move operating profit by billions of yen.
• Energy — the oil slide cuts both ways, weighing on producers while relieving cost pressure for airlines, shipping and utilities.

Not a recommendation to buy or sell any security.

Compass Insight

Monday’s tape was moved by governments, not by companies. Two policy decisions — a coordinated yen-buying intervention and a called-off military strike — reset the price of currency and oil, and everything else followed from there.

That makes the rally more fragile than its size suggests. Intervention can push an exchange rate around, but it cannot close the interest-rate gap that created the move in the first place; markets have already pulled forward bets on a Bank of Japan hike in September. Likewise, the oil-led drop in yields rests on the assumption that Hormuz actually reopens, and Tehran has not confirmed the terms Washington described.

Short term, watch whether the yen holds its gains without further official buying, and whether Treasury yields stay down. Longer term, the September BOJ meeting is the real event: a hike would address the cause rather than the symptom, but would also raise borrowing costs at home. The two outcomes that many people want — a stable yen and no rate increase — are not available at the same time.

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