United States benchmark averages rebounded on Tuesday (Wednesday AEDT), as renewed optimism around a potential de-escalation in the Iran conflict lifted investor sentiment and sparked broad-based buying across major sectors.
The rally followed reports suggesting diplomatic progress may be emerging between Washington and Tehran.
An unconfirmed report indicated Iranian President Masoud Pezeshkian was open to ending hostilities, provided certain guarantees were met.
Further supporting sentiment, the Wall Street Journal reported that U.S. President Donald Trump had signalled to aides a willingness to end military operations in the Middle East, even if the Strait of Hormuz remained largely closed.
Against this backdrop, all three major benchmark indices recorded their strongest daily performance since May.
The Dow Jones Industrial Average surged 1,125.4 points or 2.5% to close at 46,341.5. The S&P 500 climbed 184.8 points or 2.9% to 6,528.5, while the Nasdaq Composite jumped 796.0 points or 3.8% advance to 21,590.6.
Technology stocks led the gains, with megacap names driving much of the upward momentum. Nvidia rose 5.6%, while Alphabet added 5.1% and Meta Platforms jumped 6.7%.
AI-linked plays also delivered outsized gains. CoreWeave rallied 12% after securing a US$8.5 billion loan aimed at expanding its artificial intelligence infrastructure footprint.
Marvell Technology similarly surged 12.8% after receiving a $2 billion investment from Nvidia.
In corporate developments, Unilever agreed to separate its food division and merge it with McCormick in a cash-and-stock transaction valuing the U.S. spice maker at approximately $44.8 billion.
Despite the strategic move, McCormick shares fell 6.1% following the announcement.
On the economic front, U.S. labour market data pointed to emerging softness. Job openings declined more than expected in February, while hiring fell to its lowest level in nearly six years, according to government figures.
In a separate report, U.S. consumer confidence unexpectedly edged higher in March. However, underlying sentiment remained cautious, with households expressing concerns about labour market conditions and anticipating higher inflation over the coming year.
Rising gasoline prices and ongoing tariff pass-through effects were cited as key drivers of inflation expectations.
Despite the day’s strong rebound, U.S. equities remain below recent peaks. The Nasdaq is still more than 10% off its latest intraday high, while the Dow and S&P 500 are down over 8% and 6%, respectively.
The latest session also marked the final trading day of the month, capping a weak March performance for equities.
The S&P 500 declined 5.1% over the month, marking its worst showing since 2022. The Dow fell 5.4%, snapping a 10-month winning streak, while the Nasdaq dropped 4.8%.
In fixed-income markets, yields moved lower, with the U.S. 10-year Treasury yield falling 0.7% to 4.319%, while the 2-year yield declined 1.2% to 3.791%.
