Stocks rose Tuesday as investors were optimistic about prospects to resolve the Middle East conflict while they assessed the latest batch of bank earnings and U.S. inflation readings. The S&P 500 neared a new record high.
Talks to end the Iran war could resume in Pakistan over the next two days, U.S. President Donald Trump told the New York Post on Tuesday, after the collapse of weekend negotiations prompted Washington to impose a blockade on Iranian ports.
Meanwhile, the U.S. State Department said Israel and Lebanon had agreed to launch direct negotiations at a mutually agreed-upon time and place after a U.S.-hosted meeting in Washington on Tuesday, although it was not immediately clear if they agreed to a framework for peace.
With volatile oil prices dramatically impacting inflation expectations, the market has been highly sensitive to developments in the Middle East, with any headlines about setbacks sending stocks lower, while even tentative signs of an off-ramp have been sufficient to encourage investors eager for positive news.
“This is the definition of ‘climbing the wall of worry,’” said Greg Taylor, chief investment officer at PenderFund Capital Management, referring to the ability of stocks to rise despite challenges to the outlook.
“There’s so much fear out there, and it seems like the market is shrugging it off. We had a big reversal in oil prices, and that’s gotten a lot of people coming back to risk assets,” Taylor said.
Meanwhile, Tuesday’s inflation data provided some encouragement as U.S. producer prices increased less than expected in March as the cost of services was unchanged. A solid start to the U.S. earnings season also gave stocks a boost.
“The market is kind of moving past this concept of peak uncertainty. There’s been a lot of uncertainty in the market, whether that’s coming from the Iran conflict, AI disruption fears, inflation concerns or Federal Reserve policy concerns,” said Ameriprise chief market strategist Anthony Saglimbene. “Markets are starting to kind of walk away from some of the worst-case scenarios for these events and because valuations have improved over the last couple of weeks and months, investors are buying the dip right now.”
The S&P 500 gained 81.14 points, or 1.18%, to finish at 6,967.38 compared with its record close of 6,978.60 on January 27. On Monday the benchmark index had closed above its finish on February 27 - the last trading day before the U.S. and Israel started their war against Iran.
The Nasdaq Composite gained 455.35 points, or 1.96%, to 23,639.08 for its tenth daily advance in a row. The Dow Jones Industrial Average rose 317.74 points, or 0.66%, to 48,535.99, marking its highest close since early March.
The S&P/TSX Composite Index ended up 223.12 points, or 0.7%, at 34,102.36, marking the highest closing level since March 2, when the index posted a record high.
The price of oil settled 7.9% lower at US$91.28 a barrel. Energy was the biggest decliner in Toronto, falling 2.4%.
Technology added 2.8% on the TSX, with shares of data center company Keel Infrastructure Corp up 21.4%. The materials group, which includes metal mining shares, ended 1.2% higher. It was helped by a 2.2% advance in the price of gold as reduced safe-haven demand and the encouraging U.S. producer price data weighed on the U.S. dollar.
Heavily weighted financials gained 1.2% as investors assessed U.S. bank earnings. Shares of MDA Space rose 7.1% to the highest level since August 2025 after Amazon.com said it will acquire Globalstar. MDA is the primary contractor for Globalstar’s next-generation constellation.
On Wall Street, only three of the S&P 500’s 11 major industry sectors lost ground with energy down 2.2%, also leading declines.
In U.S. technology, software stocks rallied for a second straight day to close up 1.6% while the Philadelphia Semiconductor index finished up 2% for its fifth record close in a row.
On the earnings front, BlackRock shares rallied 3% after the asset manager reported a rise in first-quarter profit, helped by strong inflows into its exchange-traded funds and a sharp increase in performance fees.
Citigroup shares closed up 2.6% after hitting their highest level since late 2008 following earnings that beat first-quarter profit estimates.
However, JPMorgan had a less enthusiastic reception to its first-quarter results, while Wells Fargo shares fell after interest income fell short of market expectations.
In the health-care sector, Johnson & Johnson shares rose 0.9% after it reported earnings. Meanwhile, United Airlines shares finished up 2% while American Airlines stock rallied 8% after Reuters, citing two unnamed sources, reported that United CEO Scott Kirby had pitched a potential merger with American Airlines to Trump in late February, raising the prospect of a deal that could reshape the industry.
On U.S. exchanges 17.96 billion shares changed hands compared with the 19.10 billion moving average for the last 20 sessions. Advancing issues outnumbered decliners by a 2.62-to-1 ratio on the NYSE where there were 363 new highs and 49 new lows. On the Nasdaq, 3,345 stocks rose and 1,478 fell as advancing issues outnumbered decliners by a 2.26-to-1 ratio. The S&P 500 posted 20 new 52-week highs and one new low.
Reuters, Globe staff