US stocks moved higher on Tuesday as investors returned from the Memorial Day holiday weekend.
Optimism around artificial intelligence-driven technology stocks helped offset ongoing geopolitical uncertainty tied to Iran and the broader Middle East conflict.
The Dow Jones Industrial Average rose roughly 92 points, or 0.18%, while the S&P 500 gained about 0.54%.
Nasdaq Composite climbed more than 0.95%, supported by strength across semiconductor stocks.
The gains came despite continued uncertainty surrounding negotiations between the United States and Iran after recent US military strikes in southern Iran.
Investors also monitored developments tied to global oil prices, inflation expectations, and the Federal Reserve’s policy outlook.
Markets monitor US-Iran negotiations
Investor sentiment remained closely tied to diplomatic developments involving Washington and Tehran.
Iran’s Tasnim news agency reported that Tehran is seeking the release of $24 billion in frozen Iranian funds as part of ongoing negotiations with the United States.
US Secretary of State Marco Rubio said the talks could “take a few days,” while President Donald Trump stated on Truth Social that negotiations were “going nicely.”
At the same time, geopolitical tensions remained elevated after the United States conducted what it described as “self defense” strikes in southern Iran early Tuesday.
According to US Central Command spokesperson Tim Hawkins, the strikes targeted missile launch sites and Iranian boats allegedly attempting to place mines.
Oil markets reacted to the developments but remained below recent highs.
Brent crude rose as much as 2% during trading but stayed under the $100 per barrel level.
West Texas Intermediate crude traded around $92 per barrel after initially falling earlier in the session.
Global investors continued assessing whether diplomatic efforts could eventually help restore shipping stability through the Strait of Hormuz, a critical global energy transit route.
Semiconductor stocks lead gains
Technology and semiconductor stocks once again helped drive broader market gains as enthusiasm around artificial intelligence demand remained strong.
Shares of Marvell Technology rose nearly 9%, while Micron Technology climbed roughly 12%.
Eli Lilly shares rose after the company announced agreements to acquire three vaccine developers in deals valued at up to nearly $4 billion combined.
Pony AI surged more than 4% after revealing plans to expand its robotaxi fleet.
Wall Street has remained near record highs in recent weeks despite geopolitical volatility, supported by strong corporate earnings and continued confidence in AI-related growth opportunities.
The Dow Jones Industrial Average reached a record high last week, becoming the final major US index to surpass previous highs since the conflict involving Iran began.
According to LSEG data cited by Reuters, first-quarter earnings growth is now expected to reach 29% year-over-year, significantly above estimates from a month earlier.
Fed outlook and economic data remain in focus
Investors also continued monitoring the Federal Reserve following Kevin Warsh’s swearing-in as Fed chair on Friday.
The central bank faces growing pressure to balance inflation concerns against economic growth risks as higher oil prices continue influencing consumer sentiment and inflation expectations.
Markets currently expect the Fed to keep interest rates unchanged through most of the year, although expectations for additional tightening have increased in recent weeks.
According to CME Group FedWatch data, traders now see an 8.5% probability of a rate hike in July, compared with less than 1% a month ago.
Consumer confidence data due later Tuesday is also expected to provide additional insight into how rising gasoline prices and geopolitical tensions are affecting household sentiment.
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