United States benchmark averages ended higher on Tuesday (Wednesday AEST), with the Dow Jones Industrial Average reaching a fresh record high while the S&P 500 and Nasdaq Composite posted their strongest quarterly performances since 2020 as investors remained confident about economic and corporate earnings growth despite the ongoing conflict in the Middle East.
The Dow Jones Industrial Average rose 136.5 points, or 0.3%, to 52,319.2. The S&P 500 advanced 58.9 points, or 0.8%, to 7,499.4, while the Nasdaq Composite climbed 393.6 points, or 1.5%, to 26,213.7.
The gains capped a strong quarter for U.S. equities. The Dow surged approximately 13% over the three-month period, marking its strongest quarterly performance since 2022. The S&P 500 gained 14.9%, while the Nasdaq jumped 21.4%, their best quarterly returns since 2020.
Investor sentiment has been supported by signs of progress towards ending the conflict between the United States and Iran, even as military tensions have persisted.
Iran and the U.S. signed a memorandum of understanding on 17 June aimed at bringing the four-month conflict to an end. However, exchanges of fire over the weekend have tested the agreement, while a Qatari official said on Tuesday that senior U.S. envoys in Doha would not hold a high-level meeting with Iranian representatives.
Market participants are also preparing for the upcoming second-quarter earnings season following a strong first-quarter reporting period for S&P 500 companies, with results due to begin in the coming weeks.
Meanwhile, the sharp increase in oil prices at the outset of the conflict has fuelled concerns that inflation could remain elevated, potentially leading to further interest rate increases.
Markets are currently pricing in at least one additional Federal Reserve rate hike before the end of 2026, according to the CME Group FedWatch Tool.
Technology stocks, which have led much of the market's gains over recent years, have experienced weakness in recent weeks.
The S&P 500 and Nasdaq both recorded losses during June as investors questioned elevated valuations across the sector and continued heavy spending on artificial intelligence initiatives by major technology companies.
In after-hours trading, shares of Nike fell 1.7% after the company released its latest quarterly earnings.
On the bond markets, 10-year and two-year Treasury yields rose 1.9% and 1.5% to 4.461% and 4.17%, respectively.
