Buoyed by a continued stream of robust corporate earnings, the three major U.S. stock indices closed higher on Tuesday. The S&P 500 rose 0.69% to 7,250.69, and the Nasdaq Composite advanced 0.90% to 25,293.50, with both indices recouping Monday's losses and returning to record highs. The Dow Jones Industrial Average gained 0.43% to close at 49,152.76.

Although Middle East geopolitical tensions had initially dampened risk appetite on Monday, leading to a broad sell-off, investors quickly refocused on the positive signals emerging from the earnings season. The consensus estimate for first-quarter earnings growth for S&P 500 companies has been revised up to 28% year-over-year, significantly higher than the 14% projection at the beginning of April.

Artificial intelligence-related giants have been standout performers this quarter. Alphabet reported GAAP earnings per share that surpassed expectations by approximately 95%, Amazon.com beat estimates by 70%, and Meta exceeded forecasts by 54%. These strong results were largely driven by accelerating cloud businesses and the successful monetization of AI technologies. Palantir also delivered an impressive report, with first-quarter revenue growing about 85%, marking its fastest pace since going public, and subsequently raising its full-year guidance.

A retreat in energy prices provided further support to market sentiment. After surging nearly 6% on Monday due to Middle East tensions, Brent crude futures fell about 2% on Tuesday to around $112 per barrel, partially alleviating concerns about inflationary pressures. Strategists at J.P. Morgan Private Bank noted that corporate profits remain the core driver supporting the U.S. stock market's advance, with the key question being whether the rally can broaden out from the technology sector to more industries. On the policy front, markets will continue to monitor developments in the Strait of Hormuz and their potential impact on corporate earnings and investor sentiment.