The S&P 500 surged 1.1% on Tuesday, fueled by easing geopolitical tensions and market-friendly remarks from Federal Reserve Chair Jerome Powell. The index is now trading within just 1% of its all-time high, last reached on February 19, signaling renewed investor confidence.
Markets rallied after news broke that a ceasefire between Iran and Israel, brokered by President Trump, is now officially in effect. While both nations have already accused each other of violating the truce, the immediate threat of escalation appears to have passed — a development that provided risk assets room to bounce. Global markets had been on edge for nearly two weeks, with energy prices, currencies, and safe-haven flows swinging sharply on every headline.
Tech stocks led the charge, with the Nasdaq Composite rising 1.4%, driven by five of the Magnificent Seven posting gains. The Dow Jones Industrial Average also climbed 1.2%. Notably, Tesla (TSLA) slipped 2.4% after Monday’s robotaxi-fueled rally, while Apple (AAPL) dipped 0.6%.
Meanwhile in Washington, Powell’s testimony before Congress added further momentum. The Fed Chair noted that inflation is still trending lower despite global uncertainty and hinted that a September rate cut is possible — depending on upcoming data. “If inflation continues to decline, we’ll get to a place where we can cut rates sooner rather than later,” he said. That helped cool worries about prolonged high rates amid tariff-related price pressures.
According to the CME FedWatch tool, markets see just an 18.6% chance of a rate cut in July, but an 87% probability in September. With only four Fed meetings remaining in 2025, the central bank’s guidance for two rate cuts this year puts pressure on the timeline.
Powell’s testimony continues today before the Senate Banking Committee, and investors will be closely monitoring his tone for further clarity on the Fed’s policy path. For now, the combination of cooling war fears and a dovish Fed stance is giving equity markets fresh fuel — and bringing record highs back into reach.
