S&P 500 futures were essentially unchanged after an AI-led stock rally pushed the index to a one-month high the previous day, while falling oil continued to set the market tone. It was oil, not corporate news, that dominated the tape: Brent gave back an intraday gain of up to 2% and slid back toward $98/bbl after Kyodo reported Iran offered to open the Strait of Hormuz within seven days in exchange for lifting the US blockade.

That implies a direct chain for the wider market: the more tangible a diplomatic settlement around Hormuz looks, the faster inflation expectations fall — and with them Treasury yields. Ten-year yields eased two basis points to 4.93%, while the dollar hardly budged.

Traders are now focused on US President Donald Trump's remarks to the UN General Assembly in New York later Tuesday: the market will watch closely for any meeting between him and Iranian President Masoud Pezeshkian, which could be a turning point for oil prices. Progress in those talks would benefit energy consumers and the bond market by removing part of the inflation premium, while holders of long oil positions, who twice this week overstated the geopolitical premium, would lose.

AI-related stocks showed mixed performance after Meta Platforms' new AI agent sparked a sector-wide rally in the prior session. It's clear that ahead of the Q3 earnings season, few are willing to short tech or the AI trade. The market appears to be betting on Trump's ability to bring oil prices down before the midterms.

That confidence in the AI theme, however, remains vulnerable to macro risks: yields, though lower this week, still sit near multi-year highs as the market prices in imminent rate increases against a persistent fiscal deficit. Investors are also positioning for a summit between Trump and China's Xi Jinping later this week. Delegations from both sides wrapped a second day of talks in New York on Monday, trying to make progress ahead of Xi's visit. In my view, this mix — an AI rally that the market is reluctant to sell, oil's sensitivity to Iran negotiations, and uncertainty around a trade truce with China — makes markets especially reactive to any geopolitical headlines in the coming days. I wouldn't be surprised if Trump's UN speech, not macro releases, becomes the main driver for bond yields and oil through the end of the week.

Technically, the S&P 500 chart indicates that the immediate task for buyers is to overcome the resistance level of $7,774 to signal further upside and open the path to $7,793. Maintaining control above $7,810 would further strengthen the bulls' case. On the downside, buyers must defend $7,756. A break below that level would likely push the index back to $7,737 and open the way to $7,718.