United States benchmark averages finished mostly higher on Tuesday (Wednesday AEST) after cooler-than-expected inflation data and a strong start to the second-quarter earnings season outweighed concerns over escalating tensions in the Middle East.
The Dow Jones Industrial Average edged up 9.6 points, or 0.02%, to 52,508.3. The S&P 500 gained 28.3 points, or 0.4%, to 7,543.6, while the Nasdaq Composite climbed 233.8 points, or 0.9%, to 26,107.0.
Investor sentiment was supported by fresh inflation data from the U.S. Labor Department, which showed consumer prices rose less than expected in June.
The moderation was largely driven by easing energy costs following signs of progress in U.S.-Iran peace negotiations last month.
Attention also turned to U.S. Federal Reserve Chair Kevin Warsh, who delivered his first congressional testimony since taking office.
Warsh outlined the central bank's strategy for containing inflation while lawmakers questioned the outlook for monetary policy.
His testimony came as renewed fighting between the United States and Iran over control of the Strait of Hormuz pushed crude oil prices higher, reigniting concerns that elevated energy costs could place renewed upward pressure on inflation.
Despite those geopolitical risks, the softer inflation report prompted traders to scale back expectations for an imminent interest-rate increase.
According to the CME Group FedWatch Tool, markets are now pricing an 84.5% probability that the Federal Reserve will leave interest rates unchanged at its July meeting, up from 58.3% a day earlier.
Investors continue to expect at least one 25-basis-point rate increase before the end of the year.
Second-quarter earnings season got off to a strong start, with several major U.S. banks posting better-than-expected results as robust trading activity and stronger investment banking revenues lifted profits.
Goldman Sachs surged 9% after beating second-quarter earnings forecasts, benefiting from a rebound in dealmaking and increased trading activity amid heightened geopolitical uncertainty.
JPMorgan Chase rose 2.5%, while Bank of America added 1.9% after both lenders also reported earnings that exceeded analysts' expectations.
On the bond markets, U.S. Treasury yields moved lower, with the 10-year yield falling 0.8% to 4.587% and the two-year yield declining 2.1% to 4.191%.
