U.S. stocks finished higher Tuesday afternoon as investors seized on signs that the Iran war may yet be contained through renewed diplomacy, even after Washington tightened pressure with a blockade of Iranian ports. The Dow Jones Industrial Average closed at 48,535.8, up about 318 points, or 0.66%; the S&P 500 ended at 6,967.39, up about 81 points, or 1.18%; and the Nasdaq Composite closed at 23,639.1, up about 455 points, or 1.96%.
The day’s clearest market tell was in energy and volatility. Front-month crude oil fell $7.26, or 7.33%, to $91.82, while the VIX dropped 0.73 point, or 3.82%, to 18.39. That combination suggested traders were pricing in a lower immediate risk of a broader supply shock, even with the Strait of Hormuz still at the center of the crisis.
The geopolitical backdrop remained tense. Associated Press reported that diplomats were working to arrange a second round of U.S.-Iran talks after Washington imposed its blockade of Iranian ports, while the ceasefire itself was still holding and President Turmp said new talks were under discussion. AP also reported that U.S. forces turned back six merchant vessels in the first 24 hours of the blockade.
At the same time, Washington hosted a rare direct meeting between Israeli and Lebanese envoys. Reuters reported that Secretary of State Marco Rubio described the session as a step toward outlining a framework for a broader peace process, though Israel insisted the talks center on disarming Hezbollah rather than an immediate ceasefire. The Times of Israel said the meeting lasted roughly two hours and ended without a date for follow-up talks.
That mix of military pressure and diplomatic motion appears to have motivated investors to take on risk, especially in growth stocks. The Nasdaq’s outperformance also fit with the market’s next major focus: semiconductor earnings.
In the second half of the week, ASML will be a key test of whether the AI capital-spending boom still has legs. Reuters said investors are betting the chip-equipment maker could lift its 2026 outlook as data-center demand stays strong, while ASML’s own guidance calls for first-quarter sales of €8.2 billion to €8.9 billion and full-year revenue of €34 billion to €39 billion. China remains the main swing factor as export restrictions threaten part of that business.
Also, more big banks report earnings Wednesday. Bank of America is scheduled to hold its first-quarter earnings call at 8:30 a.m. ET Wednesday, while Morgan Stanley said it plans to release first-quarter results at about 7:30 a.m. ET and hold its conference call at 9:30 a.m. ET. After Tuesday’s rally, investors will be looking for evidence that trading desks, deal activity and credit trends are sturdy enough to keep this risk-on move going.
