US stocks closed higher on Tuesday as investors balanced continued enthusiasm for artificial intelligence-related investments against ongoing uncertainty surrounding US-Iran negotiations and rising geopolitical tensions in the Middle East.
The Dow Jones Industrial Average rose 237 points, or 0.46%, to close at 51,316.01, setting a new record high.
The S&P 500 added 0.13% to finish at 7,610.03, also near record territory, while the Nasdaq Composite edged up just 0.03% to 27,095.59.
The session reflected a market increasingly driven by AI-related developments, even as investors monitored diplomatic efforts aimed at reopening the Strait of Hormuz and ending months of conflict in the region.
AI stocks drive market leadership
Technology and semiconductor shares remained a major source of support for equities.
Marvell Technology surged after Nvidia Chief Executive Jensen Huang described the company as a future AI winner during remarks at Computex in Taipei.
“When you take a computing problem, and you disaggregate it into a lot of parts, and you distribute it across the entire data center, what’s necessary is connectivity,” Huang said. “That’s the reason why Marvell is so essential.”
The comments helped lift shares across the semiconductor sector, with the Philadelphia Semiconductor Index gaining on the day.
Hewlett Packard Enterprise also delivered one of the strongest performances in the market.
Shares jumped after the company reported strong quarterly results, raised full-year guidance, and accelerated its long-term financial targets by two years.
Further evidence of continued AI infrastructure spending came from Alphabet, which announced plans to raise $80 billion through equity offerings to fund the expansion of its artificial intelligence infrastructure.
The fundraising package includes an investment from Berkshire Hathaway.
Despite the announcement reinforcing confidence in AI spending trends, Alphabet shares declined during the session as investors weighed the implications of the large stock offering.
Investors monitor geopolitical developments
Market participants also remained focused on developments involving the United States, Iran, and Israel.
Iranian media reported that Tehran is reviewing a US proposal aimed at ending the conflict but has not communicated directly with Washington for several days.
Reports also indicated that Iran is taking a “stern” approach amid concerns over past US compliance with agreements.
At the same time, Israel continued military operations in Lebanon despite warnings from Tehran that the attacks could threaten the fragile truce.
The geopolitical uncertainty contributed to volatility in energy markets.
Oil prices extended gains from the previous session as traders assessed potential risks to global supply and the future of the Strait of Hormuz, a critical route for global energy shipments.
President Donald Trump offered mixed signals regarding negotiations. Earlier he said he “couldn’t care less” if peace talks with Iran had ended.
Later, he stated that he “had a very productive call” with Israeli Prime Minister Benjamin Netanyahu and added that discussions with Iran were “continuing, at a rapid pace.”
Economic data and Fed outlook remain in focus
Investors also evaluated fresh economic data and comments from Federal Reserve officials.
A Labor Department report showed an unexpected increase in job openings, although hiring, quits, and layoffs all declined, suggesting a slowdown in labor market activity.
Attention is now turning to Friday’s closely watched employment report, which economists expect to show that the US economy added 85,000 jobs in May, down from the previous month.
The unemployment rate is expected to remain at 4.3%.
While AI-related stocks continue to provide leadership for the broader market, investors remain attentive to geopolitical risks, inflation concerns, and upcoming economic data that could influence the Federal Reserve’s next policy moves.
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