U.S. stocks rallied on Tuesday, with crude prices falling for the second straight day, as investors welcomed a delicate ceasefire between Iran and Israel and also weighed Federal Reserve Chairman Jerome Powell’s testimony to get a clearer picture of the future rate-cut path. All three major indexes ended in positive territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 1.2% or 507.24 points, to close at 43,089.72 points.
The S&P 500 climbed 1.1% or 67.01 points to finish at 6,092.18 points. Tech, communication services, financial, and healthcare stocks were the biggest gainers, while energy stocks were the worst performers.
The Financials Select Sector SPDR (XLF) gained 1.5%, while the Technology Select Sector SPDR (XLK) added 1.8%. The Communication Services Select Sector SPDR (XLC) rose 1.3%, while the Health Care Select Sector SPDR (XLV) added 1.2%. The Energy Select Sector SPDR (XLE) lost 1.3%. Nine of the 11 sectors of the benchmark index ended in positive territory.
The tech-heavy Nasdaq gained 1.4%, or 281.56 points, to end at 19,912.53 points.
The fear-gauge CBOE Volatility Index (VIX) was down 11.85% to 17.48. Advancers outnumbered decliners on the NYSE by a 3.27-to-1 ratio. On Nasdaq, a 3.27-to-1 ratio favored advancing issues. A total of 16.94 billion shares were traded on Tuesday, lower than the last 20-session average of 18.12 billion.
Delicate Iran-Israel Ceasefire Boosts Investors’ Confidence
President Donald Trump announced a ceasefire agreement between Iran and Israel late Monday, but the two warring nations soon violated it. This came as both Israel and Iran blamed each other for breaking the agreement. Israel accused Iran of launching missile strikes, but Iran denied the claims.
Trump later blasted both countries for violating the ceasefire and wrote on Truth Social that the ceasefire is still in effect, adding that “ISRAEL is not going to attack Iran.”
However, investors still viewed the fragile truce as a sign of de-escalating tensions. Stocks rallied and oil prices fell for the second consecutive day. U.S. crude oil prices fell 6%, while the international benchmark Brent dropped 6.1%.
Shares of airline stocks jumped as oil prices cooled. Shares of United Airlines Holdings, Inc. (UAL) gained 2.7%, while American Airlines Group Inc. (AAL) jumped 4.3%. American Airlines has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Investors Weigh Powell’s Testimony
Tuesday’s moves came as investors also parsed through Federal Reserve Chairman Jerome Powell’s congressional testimony. Powell maintained his hawkish stance, saying that the Federal Reserve is in no rush to cut interest rates as lawmakers would prefer to wait and watch how Trump’s tariffs impact the economy.
Powell has been under immense pressure to resume rate cuts. Trump has repeatedly blasted Powell for delaying interest rate cuts, which is costing the U.S. economy “hundreds of billions of dollars.”
Over the past week, at least two Federal Reserve officials have said that the central bank could go for a rate cut as early as July.
Economic Data
In economic data released on Tuesday, the Conference Board said that the consumer confidence fell to 93 in June, sharply down from May’s reading of 98. Analysts had forecast consumer confidence to jump to 99.4.
The S&P CoreLogic Case-Shiller 20-City Home Price Index increased 3.4% in April, slowing from the previous month’s rise of 4.1% and missing the consensus estimate of a rise of 4%. It was the softest rise since August 2023.
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United Airlines Holdings Inc (UAL): Free Stock Analysis Report American Airlines Group Inc. (AAL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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