The U.S. stocks rose more than 1% on Tuesday, lifted by hopes of a ceasefire between Israel and Iran and clarity from Fed Chair Jerome Powell’s comments regarding rate cuts. The Dow jumped 507 points, the Nasdaq added 281 points, and the S&P 500 rose 67 points.
Investors also digested declining oil prices, advances in tech shares, and mixed signals about future interest rate cuts.
Markets Respond to Truce and Fed Outlook
Stocks on Wall Street rose for a second straight day after a fragile ceasefire deal was reached between Israel and Iran. The Dow Jones Industrial Average rose 507.24 points, or 1.19%, to 43,089.02.
The S&P 500 added 67.01 points, or 1.11%, to close at 6,092.18, and the Nasdaq Composite gained 281.56 points, or 1.43%, to end at 19,912.53. The Nasdaq 100, in fact, posted a record close, and the S&P 500 was within striking distance of a previous all-time high.
FedEx shares dropped by more than 4% in after-hours trading after reporting disappointing earnings. Advancing issues outnumbered decliners by more than three to one on the NYSE.
On the Nasdaq, more than 3,400 stocks increased, and 115 reached new 52-week highs. Volume on U.S. exchanges was 16.94 billion shares, slightly lower than the recent daily average.
After President Trump declared a cease-fire, war jitters eased, and investors saw less geopolitical risk in the region. But Iran sent mixed signals, with one official giving qualified support to the deal, as the foreign ministry demanded that Israel first end its airstrikes. And yet markets reacted with enthusiasm.
Oil prices fell sharply, pressuring energy stocks, which declined 1.5%. While soaring tech stocks led the way, with heavyweight semiconductor and crypto-related firms among the biggest gainers.
Fed Signals and Economic Data:
In testimony to Congress, the Fed Chair, Jerome Powell, indicated that interest rate cuts might be on hold, and the central bank is keeping its eye on the effects of tariffs on the economy.
Vice Chair Michelle Bowman, however, opened the door to cuts if risks to the job market mount. Markets now give only a 22% probability of a cut in July but a near 70% chance of a cut in September. Consumer confidence data also reported a decline, particularly in the outlook for jobs.
The Commerce Department will also release final Q1 GDP figures on Thursday and close out the week on Friday with the report on PCE, which provides more information on inflation and consumer spending.
Market Breath and Sector Highlights
Tech stocks surged, and energy stocks lagged among sectors. Tesla stocks fell by 2.4%, while airline shares rose 2.4% on easing geopolitical concerns. Shares of defense companies, including Lockheed Martin and RTX Corp., dropped more than 2.5%.
Crypto stocks like Coinbase and MicroStrategy surged as Bitcoin reached a one-week high. Broadcom was up close to 4% after an analyst upgrade.
