US stocks saw a significant rise on Tuesday, buoyed by investor optimism that President Trump might help restore a fragile cease-fire between Israel and Iran. Meanwhile, oil prices took a sharp downturn, with US crude and international benchmark Brent both falling over 4%.
Earlier in the day, Federal Reserve Chair Jerome Powell addressed Congress, stating that the central bank is not in a hurry to cut interest rates, taking a cautious “wait-and-see” approach. His comments contributed to a positive market atmosphere, with the Dow Jones Industrial Average climbing 367 points, or 0.9%, shortly after 11 a.m. ET.
The S&P 500 and Nasdaq also reported gains, rising 0.8% and 1.2%, respectively. This surge in the stock market came as investors expressed hope that the cease-fire between Israel and Iran could hold, despite reports of renewed attacks from both sides. In a post on Truth Social, Trump asserted that the cease-fire remains intact, stating, “ISRAEL is not going to attack Iran.”
Market analysts noted that the potential for a short-lived conflict rather than a prolonged war encouraged investors to engage in riskier trades. Chris Brigati, chief investment officer at SWBC, highlighted that this optimism led to higher stock prices. Airline stocks, including United Airlines, Frontier, and Delta, saw notable increases, with gains of 1.5%, 7%, and 2.2%, respectively. Tech stocks also performed well, with Broadcom and Nvidia rising 3.6% and 1.9%.
Investors are increasingly viewing the situation in the Middle East as an opportunity for growth, particularly in technology and artificial intelligence sectors. Wedbush Securities analyst Dan Ives pointed out that with a weakened Iran, there is a belief that the region could embrace technological advancements.
Earlier in the day, Trump expressed frustration with both Israel and Iran, stating that they have been in conflict for so long that they seem unsure of their actions. He criticized both countries for allegedly violating the cease-fire terms.
As the day progressed, the market response reflected a cautious optimism, with the hope that diplomatic efforts could stabilize the situation in the Middle East and prevent further escalation.