NEW YORK — Oil prices are dropping further, and U.S. stocks are pulling closer to their all-time high Tuesday on hopes that Israel’s war with Iran will not damage the global flow of crude, even if a tentative truce seemed to fray under fire in the morning.

The S&P 500 was 0.7% higher in morning trading, following up on even bigger gains for stocks across Europe and Asia, after President Donald Trump said late Monday that Israel and Iran had agreed to a “complete and total ceasefire.” The main measure of Wall Street’s health is back within 1.2% of its record set in February after falling roughly 20% below during the spring.

The Dow Jones Industrial Average was up 277 points, or 0.7%, as of 9:55 a.m. Eastern time, and the Nasdaq…