US stocks jumped on Tuesday as investor sentiment improved following a US-brokered ceasefire between Israel and Iran, with the Nasdaq and S&P 500 closing at their highest levels since February. At the same time, oil prices plunged for the second consecutive day, removing a major source of inflationary pressure and boosting appetite for risk assets.
- The Dow Jones rose 507 points (+1.19%), finishing at 43,089.02.
- The S&P 500 gained 1.11%, closing at 6,092.18, just 0.9% shy of its 52-week high.
- The Nasdaq Composite advanced 1.43% to 19,912.53, while the Nasdaq 100 hit a record, closing at 22,190.52.
The market rally was driven by a combination of reduced war fears, plunging oil prices, and dovish signals from the Fed. Brent and WTI crude dropped 6%, extending a two-day slide of nearly 13%—the worst since July 2022—as investors bet the fragile Middle East truce would hold.
President Trump’s announcement of a “complete and total ceasefire” between Israel and Iran on Monday night was met with cautious optimism. Despite accusations from both sides of ceasefire violations, the agreement remains intact as of market close Tuesday. Trump reiterated that “Israel is not going to attack Iran,” pushing for calm.
Tech led the rally, with Nvidia (NVDA) up 2.6%, Microsoft (MSFT) up 0.85%, and Broadcom (AVGO) gaining nearly 4%, as investor risk appetite returned. Lower oil prices also boosted airlines, with Delta and United Airlines both up over 2%.
Federal Reserve Chair Jerome Powell’s congressional testimony further supported the bullish mood. While maintaining a cautious tone, Powell said the Fed could cut rates “sooner rather than later” if tariffs don’t push inflation higher. This aligns with calls from some Trump-appointed Fed officials who support a potential rate cut as early as July.
Markets now appear to be shifting focus from geopolitical fears back to earnings season, tariffs, and fiscal policy, with investors eyeing the “One Big Beautiful Bill” that could bring new trade deals and government spending.
With all major indexes rising and volatility falling, Wall Street is setting its sights on fresh record highs—assuming calm holds in the Middle East and the Fed stays patient.
Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.
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