Wall Street Rises on Iran-Israel Ceasefire and Fed Rate Cut Hopes

U.S. stocks closed higher Tuesday as easing geopolitical tensions and comments from Federal Reserve Chair Jerome Powell boosted investor sentiment. The Dow Jones rose 507 points (+1.2%), the S&P 500 gained 1.1%, and the Nasdaq climbed 1.4%.

Markets reacted positively to a ceasefire announcement between Israel and Iran. Former President Donald Trump declared on social media that the ceasefire was “in effect,” sparking optimism that the recent 12-day conflict had ended. However, uncertainty remains after Trump criticized both countries for post-deal aggression. Israel launched new strikes in Tehran, citing Iranian missile fire. Iran denied involvement, claiming Israel violated the ceasefire beyond its official start time.

Oil prices fell sharply as the ceasefire eased concerns of supply disruption and inflationary pressure, removing a key risk premium from crude markets.

Meanwhile, Federal Reserve Chair Powell’s testimony to Congress signaled that rate cuts remain possible. “Many paths are possible,” Powell said, noting that the Fed is waiting to assess the economic impact of rising tariffs. He warned tariffs may lift inflation temporarily, though effects could be short-lived.

Two Trump-appointed Fed governors have recently supported July rate cuts. Trump also pressed for aggressive easing, criticizing Powell publicly.

In corporate news, Tesla (TSLA) extended gains after launching its Robotaxi pilot program in Austin, Texas, using 10 to 20 Model Y vehicles. Chewy (CHWY) shares declined following its $1 billion stock offering and a $100 million buyback announcement. KB Home (KBH) dropped after cutting its full-year revenue guidance to $6.3–$6.5 billion, down from $6.6–$7 billion.