Oil Price Volatility Keeps Wall Street on Edge Ahead of Inflation Data

US stocks are trading near their all-time highs on Tuesday as oil prices continue to fluctuate due to ongoing uncertainty over Iran's ability to export crude oil. The S&P 500 added a mere 0.1% and stayed close to its record high set just last Friday, while the Dow Jones Industrial Average edged up by 7 points or less than 0.1%. The Nasdaq composite remained nearly unchanged.

The Brent crude price briefly spiked above $90 per barrel in the morning but fell back below $87 before settling at $87.99, a 0.3% increase from Monday's settlement price. This volatility has become typical since the US and Israel attacked Iran in late February, causing much of the world's oil to be stranded in the Middle East.

Higher oil prices exacerbate inflation concerns, which are expected to be reflected in Wednesday's inflation data release. Economists predict a slight deceleration in inflation from 3.5% in June to 3.4% in July, but this could still pressure the Federal Reserve to raise interest rates. A rate hike would help combat rising prices but also slow down economic growth by making borrowing more expensive for households and businesses.

Market analysts are cautious about a potential rate increase, with traders betting on a coin flip's chance of a Fed rate hike in September. Meanwhile, long-term mortgage rates have reached their highest levels in over a year due to higher oil prices and inflation concerns.