Wall Street extended its rebound from four-month lows on Tuesday, with the S&P 500 rising 0.25% to close at 6,716.09, the Nasdaq Composite gaining 0.47% to finish at 22,479.53 and the Dow adding 46.85 points to end at 46,993.26.
The day’s advance was modest by absolute terms but meaningful in context, coming on top of Monday’s stronger gains and helping build the case that the initial panic selloff from the Iran war’s market impact is giving way to a more measured assessment of the conflict’s actual economic scope.
The breadth of Tuesday’s advance was notably healthy. Roughly four stocks climbed for every one that fell in early NYSE trading, with 1,939 names finishing higher and only 590 declining, according to FactSet data. That kind of broad participation matters because it distinguishes a genuine risk-on session from a narrow rally driven by a handful of large-cap AI names.
Consumer discretionary led S&P 500 sector performance, rising 1% on the day, led by Expedia Group and Booking Holdings, which is an interesting signal given that the travel sector typically underperforms when geopolitical uncertainty is elevated.
Asset managers were among the day’s standout performers. KKR, Blackstone, BlackRock and Blue Owl each gained between 2% and 4%, as traders reassessed default risks in large private-sector loans related to the software industry. That reassessment suggests some of the credit stress that had been building around AI-adjacent software companies is being repriced more favourably as earnings data provides actual evidence of how those businesses are performing rather than how nervous analysts assumed they would perform.
The Goldman Sachs, IBM and American Express trio powered the Dow’s advance, with gains of 2.57%, 2.29% and 2.01% respectively. Nvidia added to Monday’s GTC-driven gains. The laggards were defensive and dividend-oriented names including J&J, Amgen and Coca-Cola, a rotation pattern consistent with a market moving away from safety trades and back toward cyclical and growth exposure.
Oil prices did not cooperate with the bullish sentiment, with Brent Crude rising 3% on Tuesday to sit firmly above the $100 mark again as defiant rhetoric from Iranian leadership and continued military activity in the Gulf maintained the view that Hormuz disruption is not resolving quickly. The fact that equities rallied despite the oil move is the most interesting data point of the session, because it suggests investors are beginning to separate the energy price shock from its presumed macroeconomic consequences, at least over a medium-term horizon.
Qualcomm’s $20 billion buyback announcement gave the semiconductor sector a jolt, with the stock gaining 3% and providing a positive halo for the broader chip space, which had been struggling under the weight of the global memory shortage and concerns about smartphone market weakness in China. Nvidia’s continued elevation following Jensen Huang’s $1 trillion revenue projection from Monday’s GTC keynote added further AI-adjacent momentum to the session.
Bank of America reiterated its buy rating on SAP on Tuesday, citing the German software giant’s “defensive Business profile” and setting a $308 price target, implying 60.7% upside from where the stock closed on Monday. “Although we do expect the current geopolitical uncertainty to modestly impact Q1 bookings, results should illustrate SAP’s defensive business profile, with top line to accelerate to 11.5% driving 15% EBIT growth,” analyst Frederic Boulan wrote in the note. SAP is one of the few software names that has held up relatively well in the AI disruption narrative, largely because its deep integration into enterprise resource planning systems gives it a moat that general-purpose AI tools struggle to replicate.
The session closed with the S&P 500 still down roughly 3% from its year-to-date high and well below the 6,869 peak recorded in early March, meaning the recovery is real but incomplete. Investors are entering Wednesday’s Fed decision with more confidence than they had at the start of the week, but with oil still elevated, inflation trending in the wrong direction and the dot plot genuinely uncertain, the next leg of any sustained rally will depend heavily on what Powell communicates in the 30-minute press conference following the decision announcement.