U.S. stocks held onto their gains in Tuesday's late trading session, with the Dow Jones Industrial Average up by 360 points. Investors are weighing the impact of escalating U.S.-Iran tensions while focusing on the latest corporate earnings reports.
The Dow gained 366.89 points, or 0.71%, closing at 52,206.15. The Nasdaq Composite rose by 346.97 points, or 1.36%, to 25,855.04. The S&P 500 increased by 66.64 points, or 0.90%, reaching 7,509.92.
Industrial giant 3M Company saw its shares surge more than 7% after reporting second-quarter profits that exceeded expectations. General Motors also posted better-than-expected earnings, driving its stock up approximately 5%. This earnings season has started robustly. According to data from FactSet, among the roughly 54 S&P 500 index companies that have reported so far, 87% have surpassed profit expectations.
Major corporations set to release their results later this week include Google's parent company Alphabet, IBM, and Tesla.
Focus on AI and Outlook
As companies unveil their latest financials this week, traders are paying close attention to details regarding spending on artificial intelligence. They are also listening carefully during earnings conference calls to confirm that executives' outlooks for the second half of the year have not become more cautious.
Bret Kenwell, an investment analyst at eToro U.S., stated, "The next two weeks will be critical for earnings, and not just for tech stocks. The broader message is clear: companies that fail to meet Wall Street's lofty expectations will be punished."
He added, "This contrasts sharply with last quarter when uncertainty lowered the bar, and investors were primarily seeking reliable evidence that geopolitical turmoil hadn't derailed U.S. corporations. Now, after the stock market has repeatedly hit record highs, even stellar performance may not always satisfy market expectations."
Semiconductor Sector Strength
The semiconductor sector also provided a lift to the broader market during early trading. The VanEck Semiconductor ETF (SMH) rose more than 3%. Shares of Marvell Technology, Micron Technology, and Astera Labs were all up about 6% in pre-market activity. Intel gained more than 5%.
Tuesday's advance followed a down trading day, during which traders were assessing the implications of the escalating U.S.-Iran conflict.
Geopolitical Tensions and Oil Prices
Since the U.S. President declared an "end" to the U.S.-Iran ceasefire, U.S. Central Command has conducted airstrikes on Iran for a tenth consecutive night. Meanwhile, forces from Tehran have attacked U.S. military assets in the Middle East, and their Houthi allies have announced a maritime blockade against Saudi Arabia.
Oil prices were volatile on Tuesday as Wall Street monitored a fresh diplomatic push for mediation efforts between the U.S. and Iran. Reports indicated that mediators had proposed a 10-day ceasefire between the two adversaries. West Texas Intermediate crude futures rose over 1%, trading above $84 per barrel, while the international benchmark Brent crude futures also gained more than 1%, trading above $90 per barrel.
During Monday's session, oil prices climbed after the U.S. President posted on Truth Social that Tehran would "pay a price" for the deaths of three U.S. service members. The rise in energy prices contributed to a decline in the major stock indices that day, although semiconductor stocks managed to recover some of the ground lost in last week's sell-off.