US stocks moved higher on Tuesday as investors balanced renewed optimism around artificial intelligence-driven growth with ongoing geopolitical uncertainty tied to the Middle East conflict.
The Dow Jones Industrial Average rose about 0.45% or 222 points, while the S&P 500 added roughly 0.13% and the Nasdaq-100 gained around 0.04% after the market opened. The gains came after a volatile start to the week, with markets reacting to shifting headlines on US-Iran tensions and the outlook for a ceasefire.
AI optimism and earnings support sentiment
Investor sentiment was underpinned by continued enthusiasm around artificial intelligence and strong corporate earnings. JPMorgan Chase raised its year-end target for the S&P 500, citing robust earnings growth driven by AI and technology companies.
At the same time, Amazon said it plans to invest up to $25 billion in AI startup Anthropic, signaling that Big Tech remains committed to aggressive spending in the sector. Amazon shares rose 2.2%.
Earnings season has also provided support. According to LSEG data, 87.5% of the 48 S&P 500 companies that had reported results as of last Friday beat analyst expectations, well above the long-term average of 67.4%.
Healthcare stocks were among the standout performers. UnitedHealth Group surged more than 8% after beating first-quarter expectations and raising its full-year profit forecast. Peers CVS Health and Humana also posted gains of over 1.7% and 3.6%, respectively.
Geopolitical uncertainty keeps markets volatile
Despite the positive drivers, markets remained sensitive to geopolitical developments. President Donald Trump said the US expects to secure a deal with Iran, expressing confidence in ongoing negotiations.
“We’re going to end up with a great deal,” Trump said on CNBC’s “Squawk Box” on Tuesday. “They have no choice. We’ve taken out their Navy, we’ve taken out their Air Force, we’ve taken out their leaders.”
He added that the US military is “ready” to take further action if an agreement is not reached before the ceasefire deadline and indicated he does not want to extend it.
The geopolitical backdrop has contributed to sharp swings in markets. Optimism briefly surged after Iran signaled it would reopen the Strait of Hormuz, a key oil transit route, but tensions resurfaced over the weekend following reports of military actions and seizures involving vessels.
Meanwhile, oil prices edged lower, with West Texas Intermediate and Brent crude both declining slightly, providing some relief to inflation concerns.
Policy focus and mixed corporate signals
Investors are also closely watching developments in US monetary policy. Attention has turned to the confirmation hearing of Federal Reserve chair nominee Kevin Warsh.
In his prepared remarks, Warsh emphasized the importance of central bank independence, stating, “The Fed must stay in its lane.”
“Fed independence is placed at greatest risk when it strays into fiscal and social policies where it has neither authority nor expertise,” he added.
The outcome of the confirmation process could have significant implications for the future direction of monetary policy, particularly as President Trump has indicated he may seek changes in Federal Reserve leadership.
On the corporate front, not all companies shared in the upbeat sentiment. GE Aerospace fell about 1.4% after warning of a challenging environment marked by high fuel costs, supply constraints, and slower global growth.
Alaska Air Group declined 1.19% after withdrawing its full-year profit forecast, while Apple slipped 0.5% following news of a planned leadership transition, with CEO Tim Cook set to hand over to hardware chief John Ternus.
Economic data also remained in focus, with US retail sales for March coming in stronger than expected, supported by higher gasoline prices and tax refund-driven spending.
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