NEW YORK (Reuters) — Wall Street advanced on Tuesday as investors welcomed a fragile truce with Israel and Iran while parsing Federal Reserve Chair Jerome Powell’s congressional testimony for clues regarding the U.S. central bank’s path forward.
All three major U.S. stock indexes were on track for their second straight session of solid gains following U.S. missile strikes on Iran’s uranium enrichment assets.
The benchmark S&P 500 was less than 1% below its all-time closing high reached on February 19.
Late Monday, U.S. President Donald Trump announced a ceasefire agreement, but then on Tuesday, the president stepped in to urge Israel to stand down on a retaliatory attack on Iran after Iran killed at least four people in an attack in southern Israel targeting civilians just before the ceasefire went into effect.
Still, investors viewed the ceasefire as a sign of de-escalating tensions.
“The market has learned very precisely over the last generation that any time there’s a geopolitical flare-up in the Middle East that affects U.S. financial markets, those effects will be short-lived,” said Scott Ladner, chief investment officer at Horizon in Charlotte, North Carolina.
“The ceasefire is just cementing that view,” Ladner added.
Crude prices slid on waning supply concerns related to the conflict, dragging energy shares lower.
Powell, speaking before the U.S. House of Representatives Financial Services Committee, reiterated his view that rate cuts can wait until the economic effects of tariff increases are better known, adding “we are well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance.”
Financial markets have been pricing in a more than 20% likelihood that the Fed will lower its key interest rate at the conclusion of its upcoming July policy meeting, and a near 70% probability that its first rate cut will land in September.
“We think September’s very likely and we think while July is not a zero probability event, it’s definitely a long shot,” Ladner said.
On the economic front, Consumer Confidence deteriorated this month, with pessimism toward the jobs market falling to its lowest level since March 2021.
The Commerce Department is expected to release its final take on first-quarter GDP on Thursday, and on Friday its closely watched Personal Consumption Expenditures (PCE) report will shed light on inflation, consumer spending and income growth.
The Dow Jones Industrial Average rose 513.96 points, or 1.21%, to 43,095.74, the S&P 500 gained 71.64 points, or 1.19%, to 6,096.94, and the Nasdaq Composite gained 305.28 points, or 1.56%, to 19,936.25.
Among the 11 major sectors of the S&P 500, Tech shares led the gainers, while energy stocks were the sole decliners.
Among megacap stocks, Tesla shares shed 2.0%.
Airline stocks gained altitude amid cooling Middle East tensions. The S&P 1500 Airlines index advanced 2.3%.
But defense stocks lost ground, with Lockheed Martin and RTX Corp both off about 2.9%.
Shares of crypto companies rose after bitcoin hit a one-week high. Coinbase Global and Strategy advanced 11.7% and 3.8% respectively.
Broadcom touched a record high, after HSBC raised the semiconductor manufacturer to “buy” from “hold”. The stock was last up 3.4%.
Package delivery firm FedEx is expected to report quarterly results after the closing bell.
Advancing issues outnumbered decliners by a 3.38-to-1 ratio on the NYSE. There were 195 new highs and 49 new lows on the NYSE.
On the Nasdaq, 3,430 stocks rose and 1,007 fell as advancing issues outnumbered decliners by a 3.41-to-1 ratio.
The S&P 500 posted 18 new 52-week highs and no new lows while the Nasdaq Composite recorded 109 new highs and 49 new lows.
(Reporting by Stephen Culp; Additional reporting by Kanchana Chakravarty in Bengaluru; Editing by David Gregorio)