Stocks jumped higher Tuesday on bets that the fragile ceasefire agreement between Israel and Iran will hold as President Donald Trump called on Tel Aviv to halt its strikes on Tehran.
The Dow Jones Industrial Average (NYSE: DIA) climbed over 500 points, adding to its more than 300 point advance in the previous session. The broader market S&P 500 Index (NYSE: SPY) and tech-heavy Nasdaq Composite (NASDAQ: QQQ) also added over 1.1% and 1.4%, respectively.
Wall Street's positive momentum comes after Trump said he was "not happy" with both sides of the escalating conflict, as Israel and Iran both accuse the other of violating the ceasefire reached earlier on Tuesday.
Trump said in a post on his social media platform Truth Social: "ISRAEL. DO NOT DROP THOSE BOMBS. IF YOU DO IT IS A MAJOR VIOLATION. BRING YOUR PILOTS HOME, NOW!" He later wrote in a seperate post that Tel Aviv is "not going to attack Iran."
Oil futures continued to fall on the news, with international benchmark Brent Crude and domestic gauge West Texas Intermediate each dropping another 6% on Tuesday, added to their 7% rut from the day before.
On the earnings front, Carnival Cruise (NYSE: CCL) shares rose higher on Tuesday after the cruise line delivered strong fiscal second-quarter results that topped expectations and raised its full-year guidance across multiple metrics -- the company's expected adjusted net income is projected to be 40% higher than 2024, which is nearly $200 million more than its prior forecast.
"We also remain on track for a strong 4 percent net yield growth in the second half, consistent with what we forecasted back in December which was before the complex macroeconomic and geopolitical backdrop we have all experienced in the last few months. Combined, this has enabled us to raise full year guidance again," CEO Josh Weinstein said in a statement.
In economic news, housing prices cooled nationally in April, as rising supply and slowing demand weighs on prices. Headline prices increased just 2.7% year-over-year in the S&P CoreLogic Case-Shiller Index's latest reading released Tuesday, down 3.4% from March's print and marking the smallest gain in about two years.
"What's particularly striking is how this cycle has reshuffled regional leadership -- markets that were pandemic darlings are now lagging, while historically steady performers in the Midwest and Northeast are setting the pace. This rotation signals a maturing market that increasingly driven by fundamentals rather than speculative fervor," said Nicholas Godec, head of fixed income at S&P DowJones Indices, in a release.
Consumer confidence also unexpectedly declined in June as Americans continue to grow more cautious about the labor market amid broader uncertainty from Trump's tariffs. The Conference Board's consumer confidence index fell by 5.4 points to 93 in June, coming in below consensus expectations. The drop in sentiment was seen across all age groups and nearly all income levels, the report showed, with the largest decline based on political affiliation seen amongst Republicans.
"The decline was broad-based across components, with consumers' assessments of the present situation and their expectations for the future both contributing to the deterioration. Consumers were less positive about current business conditions than May. Their appraisal of current job availability weakened for the sixth consecutive month but remains in positive territory, in line with the still-solid labor market," Stephanie Guichard, senior economist of global indicators at The Conference Board, said in a statement.
FedSpeak
Federal Reserve Chair Jerome Powell began his first of two testimonies on Capitol Hill on Tuesday, telling members of the House Financial Services Committee that the central bank is committed to stabilizing prices as policymakers continue to assess the impacts of Trump's tariff policies.
"Policy changes continue to evolve, and their effects on the economy remain uncertain," Powell said, maintaining the stance he has taken over the past several months that policymakers should "wait-and-see" the potential economic impacts of tariffs before cutting interest rates. "The effects of tariffs will depend, among other things, on their ultimate level."
"We do expect tariff inflation to show up more," Powell added. "But I want to be honest, we really don't know how much of that's going to be passed through the consumer."
New York Fed President John Williams said Tuesday he expects inflation to reach 3% this year in a speech in Albany, stating that he agreed with the Federal Open Market Committee's decision to hold the fed funds rate in a range between 4.25% to 4.5% at its most recent meeting.
"Maintaining this modestly restrictive stance of monetary policy is entirely appropriate to achieve our maximum employment and price stability goals," Williams said. "It allows for time to closely analyze incoming data, assess the evolving outlook, and evaluate the balance of risks to achieving our dual mandate goals."
Pantheon Macroeconomics senior U.S. economist Oliver Allen wrote in a Tuesday note that signs of weakness in the labor market could support the central bank's expected trajectory to cut interest rates in the fall.
"The FOMC's hesitation to commit to a particular course on monetary policy is understandable given the big uncertainties that remain around tariffs and their economic impact," Allen wrote. "But we think the evidence of a marked deterioration in the labor market will be stark enough by September to convince the Fed to resume easing policy, despite lingering worries about inflation."
Wall Street is currently pricing in a 23% probability of a rate cut at the Fed's next meeting in July, according to the CME Group's FedWatch tool, with outlooks broadly expecting a reduction of at least 25 basis points starting in September.
Looking ahead, market participants will continue to monitor the latest developments surrounding the Israel-Iran ceasefire as stocks trade near record highs.