Tech shares led U.S. stocks modestly higher on Tuesday as hopes for an earlier-than-expected end to the U.S.-Israeli war on Iran persisted against a backdrop of renewed military threats and ongoing worries of economic stagflation.
All three major U.S. stock indexes were green, extending Monday’s last-minute, knee-jerk rally in response to comments by U.S. President Donald Trump suggesting the war could be concluded sooner than he anticipated.
“(Trump’s) comments from yesterday opened the door for an off-ramp to this crisis,” said Paul Nolte, senior wealth adviser and market strategist at Murphy & Sylvest in Elmhurst, Illinois.
“It’s the first time markets heard that and it has given investors the ability to say, ‘OK, maybe this is not going to last forever.’”
The indexes wavered through early-session trepidation as U.S. Defense Secretary Pete Hegseth warned that Tuesday would be the most intense day thus far of strikes against Iran.
The conflict has sparked a jump in crude prices, which have fueled worries over inflation against a backdrop of a weakening labor market – a toxic combination of rising costs and a
softening economy called stagflation.
But the market remained confident in a near-term resolution, despite an announcement by Iran’s Revolutionary Guards that the country would not allow any oil to leave the Middle East until
U.S.-Israeli attacks ceased, which prompted threats from Trump that he would strike back “20 times harder” if they blocked crude exports.
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Crude and natural gas prices eased from the worrying US$120 per barrel mark to about $85, the Toronto Stock Exchange was up by 0.3 per cent as of 3:30 p.m. EST.
In addition to Trump’s prediction of a prompt de-escalation of the Iran war, his administration indicated a potential willingness to end oil sanctions against Russia, which eased upward pressure on oil prices, while also raising the possibility of progress toward ending Russia’s war on Ukraine.
Energy Secretary Chris Wright announced on Tuesday that the U.S. Navy had successfully escorted an oil tanker through the Strait of Hormuz and offered assurances that oil continues to move to the global marketplace.
U.S. and Brent front-month crude futures were both down more than 14 per cent.
“When you see that type of a parabolic move, whether it’s in gold or oil or anything else, you tend to get a pretty violent reversal as soon as you get some news on the other side,” Nolte added.
The Dow Jones Industrial Average rose 354.37 points, or 0.74 per cent, to 48,095.17, the S&P 500 gained 32.45 points, or 0.48 per cent, to 6,828.44 and the Nasdaq Composite gained 148.37 points, or 0.65 per cent, to 22,844.32.
Of the 11 major sectors in the S&P 500, tech showed the biggest percentage gain, while energy, weighed by falling crude prices, was the sole decliner.
Chipmakers were higher on Tuesday, with Nvidia up 1.0 per cent, while SanDisk and Western Digital advanced 7.3 per cent and 5.2 per cent, respectively.
The S&P Software & Select Services index, battered in recent months over fears of AI-related disruption, was once again the clear underperformer, falling 1.5 per cent.
Health insurer Centene fell more than 14.1 per cent after it reaffirmed its 2026 profit forecast.
Results from enterprise software maker Oracle were expected later in the day, and could offer insight into corporate AI-related expenditures. Its shares were off 0.2 per cent.
Economic data expected later this week has the potential to move markets. This includes the Labor Department’s Consumer Price Index, the Commerce Department’s second take on fourth-quarter GDP and its broad Personal Consumption Expenditures report.
Advancing issues outnumbered decliners by a 2.31-to-1 ratio on the New York Stock Exchange. There were 61 new highs and 49 new lows on the NYSE.
On the Nasdaq, 3,073 stocks rose and 1,602 fell as advancing issues outnumbered decliners by a 1.92-to-1 ratio.
The S&P 500 posted 3 new 52-week highs and 5 new lows while the Nasdaq Composite recorded 63 new highs and 83 new lows.
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