United States benchmark averages jumped on Tuesday (Wednesday AEST) while oil prices plunged for a second consecutive session, as investors grew increasingly confident that a ceasefire between Israel and Iran would hold.
The Dow Jones Industrial Average rallied 507.2 points or 1.2% to close at 43,089, the S&P 500 rose 67 points or 1.1% to 6,092.2, and the tech-heavy Nasdaq Composite climbed 281.6 or 1.4% to finish at 19,912.5.
Crude oil prices fell steeply once again, with West Texas Intermediate down 6% and Brent crude losing 7.4% - extending Monday’s 7.2% plunge.
Equities gained momentum throughout the session as oil hit fresh intraday lows, buoying energy-sensitive sentiment.
Airlines stocks were among the beneficiaries, with United Airlines and Delta Airlines up 2.7% apiece amid lower fuel costs expectations.
In the tech sector, Broadcom surged 3.9%, while NVIDIA added 2.6%, as a broader appetite for risk returned to markets.
The upbeat tone follows efforts by U.S. President Donald Trump to reinforce a tenuous truce between Israel and Iran that began early Tuesday.
Although both nations accused one another of violations, Israel reported an attack on a radar facility near Tehran, while Iran denied launching retaliatory missile strikes.
Elsewhere, investors digested fresh comments from Federal Reserve Chair Jerome Powell, who appeared before the House Financial Services Committee.
Powell indicated the Fed is adopting a wait-and-see approach to rate cuts, particularly in light of the potential economic effects of Trump’s proposed tariffs.
His appearance on Capitol Hill comes amid mounting political pressure, with the White House urging the Fed to ease policy. However, some Fed officials have recently said a rate cut as soon as July may be warranted depending on incoming data.
The CME FedWatch Tool currently indicates an 18.1% chance of a 25 basis point rate cut at the next Fed meeting.
In the bond market, the 10-year Treasury note yield dropped to 4.296%, while the 2-year yield fell to 3.821%.
