U.S. equity markets finished Tuesday's session with broad gains, as the Nasdaq Composite and S&P 500 indexes reached fresh all-time closing highs. The positive momentum came despite weekend clashes between U.S. and Iranian forces in the Strait of Hormuz and subsequent missile and drone attacks by Iran targeting the United Arab Emirates. Market concerns over a full-scale escalation were alleviated after the U.S. government indicated that the ceasefire framework between the nations remained intact.
The Dow Jones Industrial Average advanced by 356.35 points, or 0.73%, to close at 49,298.25. The Nasdaq Composite climbed 258.32 points, or 1.03%, finishing at 25,326.13, while the S&P 500 gained 58.50 points, or 0.81%, to settle at 7,259.25. During the session, the Nasdaq hit an intraday record high of 25,361.05.
U.S. Secretary of Defense Hagesses stated on Tuesday that the U.S.-Iran ceasefire agreement was still valid and that Iran's attacks on the UAE had not reached the threshold required to restart large-scale military operations. This announcement contributed to a decline in oil prices.
On Monday, the U.S. initiated efforts to reopen the Strait of Hormuz, with two U.S.-flagged commercial vessels successfully transiting the strait under naval escort. Despite the de-escalation, former President Trump warned that Iran would face devastating consequences if it attacked American ships.
Investment bank Goldman Sachs cautioned that while global oil inventories are not at critical levels, the pace of their decline and uneven regional distribution are raising concerns about localized shortages. The CEO of Chevron indicated that the effects of fuel shortages would become more apparent in the coming weeks.
Hopes for a sustained ceasefire prompted a retreat in international oil prices from recent highs. The easing of energy supply pressures allowed investors to refocus on robust corporate earnings.
Technology and semiconductor stocks were the primary drivers of the market's advance. Among individual movers, Intel's stock price surged nearly 13% at the close. Reports indicated that Apple has held preliminary discussions with Intel and Samsung Electronics about the possibility of either company manufacturing main processors for its devices. Although talks are in early stages, the market views this as a potential opportunity for Intel's foundry business to secure a flagship client and for Apple to diversify its supply chain away from a single supplier.
Furthermore, Barclays raised its price targets for SK Hynix and Samsung Electronics, providing an additional boost to sentiment across the semiconductor sector.
Analysts noted that while the Middle East situation remains a market focus, corporate earnings performance continues to be the core driver supporting U.S. equities. A key factor for the future will be whether profit growth can broaden beyond the technology sector to other industries to sustain the market's upward trend.
In corporate news, Pfizer reported first-quarter profit and revenue that exceeded expectations and reaffirmed its full-year financial outlook. Shares of Anheuser-Busch InBev, the Belgian brewer listed in the U.S., rose 8.7% after it announced optimistic quarterly results.
An exception was Palantir Technologies, whose stock fell 6.9% even though the company posted first-quarter results that beat analyst forecasts, with revenue growing at its fastest pace since its 2020 public debut. The company also raised its full-year guidance.
On the economic data front, the U.S. trade deficit widened on a monthly basis in March but was 55% smaller compared to the same period a year before the implementation of certain import tariffs. The U.S. Commerce Department reported that the total goods and services trade deficit for the month was $60.3 billion, an increase of $2.5 billion from February but slightly below the Dow Jones estimate of $60.9 billion. Annually, the trade deficit decreased by $211.2 billion from the previous year. Exports grew by 12%, while imports declined by 9.1%. This data represents the final monthly report before the anniversary of the tax policies enacted in April.
U.S. job openings saw a slight decline in March to 6.866 million, while hiring activity showed significant improvement. The Job Openings and Labor Turnover Survey (JOLTS) report released by the Labor Department indicated that the number of job openings decreased modestly from 6.922 million in February to 6.866 million, roughly in line with market expectations of 6.835 million. The job openings rate edged down to 4.1% from 4.2%.
Despite the minimal change in job openings, hiring activity rebounded strongly. The report showed that the number of hires surged by 655,000 in March to 5.554 million, with the hire rate jumping to 3.5% from 3.1% in February. This suggests that companies' willingness to hire has notably improved after a sluggish start to the year.
Conversely, the number of layoffs increased by 153,000 to 1.867 million, and the layoff rate rose slightly to 1.2% from 1.1%. Overall, the labor market remains in a state of balance characterized by low levels of both hiring and separations.
Analysts pointed out that the improvement in the March job market was primarily driven by continued expansion in the healthcare sector and a technical rebound as disruptive factors like adverse weather and strikes subsided. However, rising energy prices stemming from the Middle East situation could potentially act as a future constraint on hiring. Market participants will closely monitor the non-farm payrolls report for April, due on Friday, for further insights into the labor market's trajectory.
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