Stocks jumped out of the gate Tuesday as market participants cheered news of a ceasefire in the Israel-Iran war. And a big rally in the tech sector kept the momentum going into the close.
President Donald Trump announced the truce Monday evening on his Truth Social account. While both countries accused each other of violating the ceasefire within hours of it going into effect, it now appears to be holding.
"Peace in the Middle East, at least for now, has market participants rejoicing while they aggressively scoop up stocks and Treasuries," says José Torres, senior economist at Interactive Brokers.
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"Shall the truce hold, it has the potential to significantly boost confidence and trust in President Trump's ability to quell violence around the world and may even offer Washington leverage as we approach the July 9 deadline for trade deals," Torres adds.
At the close, the Dow Jones Industrial Average was up 1.2% at 43,089, the S&P 500 was 1.1% higher at 6,092, and the Nasdaq Composite had gained 1.4% to 19,912.
Powell reiterates a "wait-and-see" approach
Trump also posted about Federal Reserve Chair Jerome Powell ahead of the central banker's mid-morning testimony before the House Financial Services Committee.
The president again called for "'Too Late" Jerome Powell" to cut the federal funds rate, saying it "should be at least two to three points lower."
But Powell was unshaken, maintaining that the central bank will take a wait-and-see approach to interest rates.
"If it turns out that inflation pressures do remain contained, we will get to a place where we cut rates sooner rather than later, but I wouldn't want to point to a particular meeting," Powell said during his first day on Capitol Hill. (He will speak before the Senate Banking Committee on Wednesday.)
The Fed chief added that he expects inflation to pick up this summer due to President Trump's tariff policies, but noted the central bank is also keeping a close eye on the labor market.
If it were to "meaningfully weaken in a way that was concerning, that would matter for that decision," Powell said, though he added that both the economy and the labor market are strong.
Mastercard pops on a stablecoin shift
In single-stock news, Mastercard (MA) jumped 2.8% after the credit card company said it is partnering with Fiserv (FI, +1.2%) to integrate the fintech's FIUSD stablecoin into its global payments network.
Stablecoins are a type of cryptocurrency that is pegged to a stable asset class, such as fiat currency. And the Senate's recent passage of the GENIUS Act, a bill that seeks to create a regulatory framework for dollar-pegged stablecoins, is bringing the digital asset into the mainstream.
Their relevance and use cases are rapidly expanding, so much so that major retailers are reportedly considering issuing their own stablecoins to circumvent credit card fees.
Mizuho Securities analyst Dan Dolev says these worries over stablecoins' ability to disrupt traditional financial systems – which have MA stock down nearly 5% month to date – "are overblown."
Speaking on CNBC's "The Exchange," Dolev said that for large credit card companies, specifically, which are levered toward consumers, "it's going to be very hard to get the consumer to use stablecoins."
Rather, he believes the disruption will be more in business to business (B2B) and corporate payments. He has an Outperform (Buy) rating on the blue chip stock.
AMD stock gets upgraded
Elsewhere, Advanced Micro Devices (AMD) was one of the best tech stocks on Tuesday, rising 6.8% on a bullish analyst note.
CFRA Research analyst Angelo Zino upgraded the chip stock to Strong Buy from Buy and raised his price target to $165 from $125 – representing implied upside of nearly 20% to current levels.
The upgrade "reflects several factors," Zino says, including AMD's ability to "close the competitive gap to Nvidia (NVDA, +2.6%)" by next year with the launch of its high-performing MI400X artificial intelligence (AI) chip and its shift to rack-scale solutions.
And while Zino admits that China export controls are constraining near-term graphics processing unit (GPU) revenue and tariff uncertainty remains an overhang, he expects GPU sales to see a sharp recovery later this year.
Zino isn't the only one with an upbeat opinion of the semiconductor stock. According to S&P Global Market Intelligence, 27 covering analysts say AMD is a Strong Buy, seven have it at Buy and 16 have it at Hold. This works out to a consensus Buy recommendation.
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