U.S. Stocks rose on Tuesday as President Donald Trump told CNBC he expects the U.S. And Iran to make a “great deal” ahead of a ceasefire that’s set to expire Wednesday.
The Dow Jones Industrial Average advanced 270 points, or 0.5%, boosted by gains in UnitedHealth and Amazon. The S&P 500 and Nasdaq Composite traded 0.2% and 0.3% higher, respectively. The Russell 2000 index moved up 0.4%, scoring a fresh all-time high.
“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.”
The president added, however, that the U.S. Military is “ready” to bomb Iran if a deal is not signed by the ceasefire deadline and that he does not want to extend it.
This comes after Trump said earlier Tuesday in a Truth Social post that Iran “Violated the Cease Fire numerous times!”
Oil prices were steady before the deadline following a big decline in recent days in anticipation of a deal. West Texas Intermediate futures fell 0.6% to above $89 per barrel. Brent futures shed 0.3% to trade above $95 a barrel.
“Investors are starting to look beyond the Iran conflict, and for us, it really had everything to do with normalizing traffic through the [Strait of Hormuz],” said Brian Mulberry, Zacks Investment Management chief market strategist. “Normalization of traffic is the most important thing to markets, and it seems like we’re very close to that.”
To be sure, there was a brief jump in traffic of commercial ships through the strait over the weekend that then slowed again following a number of vessel attacks.
“As confidence begins to come back around that traffic will normalize, then the commodity prices will similarly, so that’s good for the market in that regard,” Mulberry continued. “We expect that the critical piece of it, which is control over the strait, will absolutely be resolved by the end of this week.”
The major averages slipped on Monday with traders on edge ahead of the ceasefire expiration and momentum slowing a bit on the market comeback. The Nasdaq snapped its longest winning streak since 1992 of 13 days.
In the prior trading week, the S&P 500 and Nasdaq notched multiple all-time intraday and closing highs on hopes for an end to the Iran war in the near future. Notably, the former finished above 7,100 for the first time ever.
Those on Wall Street, including Mulberry, remain bullish on the broader picture ahead for equities. “What you’re seeing is a really strong Q1 when it comes to earnings,” he said, noting an anticipated double-digit percentage growth in that area as well as “strong” revenues. “I don’t think that that can be overlooked in this moment in time.
For more on this story, see Trump Announces U.S. Negotiators to Travel to Pakistan for Iran Talks Despite Blockade.
Tech is still driving the bus — but industrials are a growing force in this market, and transports are on a tear. The large-cap tech ETF XLK is set to extend its win streak to a record-breaking 15 straight sessions. But it’s not just megacap gravity. The small-cap tech ETF, PSCT, just notched its seventh straight intraday record high. Meanwhile, semis keep soaring. SOXX is stretching its win streak to a record-tying 15 (last seen in June 2014) and has now logged 10 straight intraday all-time highs. And the Dow Transports (^DJT) have scored eight record intraday highs in the last 10 sessions.
Here are this morning’s intraday record highs: Indexes: Dow Jones Transportation Average (^DJT), Russell 2000 (^RUT), S&P MidCap 400 (^MID), S&P SmallCap 600 (^SP600), S&P 500 Equal-Weight Index (^SPXEW) Dow Jones Sectors/Industries: Electronic Equipment, Telecom Equipment, Electrical Components & Equipment, Electronic & Electrical, Commercial Vehicles & Trucks, Heavy Construction, Industrial Metals, Marine Transportation, Retailer Broadline, Semiconductors, Trucking, Tech Hardware & Equip
Large-cap sector ETFs: Technology (XLK) Small-cap sector ETFs: Small-cap tech (PSCT) Industry/Style/Country ETFs: Semiconductors (SOXX), S&P 500 High Beta (SPHB), Value (VLUE), Micro-Cap (IWC), Canada (EWC), Taiwan (EWT) Consumer discretionary stocks: Avis Budget (CAR), Hilton (HLT), Marriott (MAR), Ralph Lauren (RL) Financial stocks: AEHR (AEHR), Bank of Recent York Mellon (BK), Northern Trust (NTRS), State Street (STT) Industrial stocks: Caterpillar (CAT), Comfort Systems (FIX), Cummins (CMI), CSX (CSX), Eaton (ETN), Emcor (EME), FedEx (FDX), GE Vernova (GEV), Hubbell (HUBB), Hunt (JBHT) (JBHT), Jabil (JBL), Kirby (KEX), Kulicke & Soffa (KLIC), MKS Instruments (MKSI), Monolithic Power Systems (MPWR), Nucor (NUE), ONTO Innovation (ONTO), Photronics (PLAB), Powell Industries (POWL), Quanta Services (PWR), Ryder (R), Steel Dynamics (STLD), TE Connectivity (TEL), Trane (TT), Ultra Clean (UCTT) Real estate stocks: Digital Realty (DLR) Tech stocks: Amkor (AMKR), Arista Networks (ANET), ASE Technology (ASX), FormFactor (FORM), Hewlett Packard Enterprise (HPE), Keysight (KEYS), KLA (KLAC), Lattice Semiconductor (LSCC), MACOM (MTSI), Marvell (MRVL), Nova (NVMI), SiTime (SITM), Teradyne (TER), Texas Instruments (TXN)
This follows our earlier report, U.S. Stocks Surge as Iran Opens Strait of Hormuz, Oil Prices Drop Sharply.
What does the market’s reaction say about investor confidence in a diplomatic resolution?
The rally in stocks and stabilization in oil prices indicate investors are pricing in a high probability of a deal being reached before the ceasefire expires, based on Trump’s confidence and market strategists’ expectations for normalized shipping through the Strait of Hormuz.
Why are sectors beyond technology showing strength if the Iran situation remains unresolved?
Industrials, transports, and small-cap tech are reaching record highs independently, reflecting underlying economic strength in earnings and revenue growth that investors say should not be overlooked even amid geopolitical uncertainty.