Markets Delighted by Fed Inaction: Nasdaq 100 at All-Time High

U.S. stocks surged more than 1 percent on Tuesday, lifted by cautious optimism over a fragile ceasefire between Israel and Iran, and careful remarks from Federal Reserve Chair Jerome Powell as he addressed lawmakers on Capitol Hill.

All three major U.S. stock indices ended the day solidly higher, marking the second consecutive session of gains. The Nasdaq 100 reached an all-time closing high, while the S&P 500 came within striking distance of its record set on February 19.

The rally followed U.S. military strikes on Iranian nuclear enrichment assets earlier in the week. Despite reports that the ceasefire declared by President Donald Trump had been breached by Israeli forces, investors chose to interpret the overall tone as a tentative step toward de-escalation in the Middle East.

Speaking before the House Financial Services Committee, Powell reiterated that the Fed is in no rush to cut interest rates. He noted that the central bank is in a "good position" to wait for more clarity on the economic fallout from trade tensions before adjusting its policy stance.

Market participants are increasingly betting on a rate cut in the coming months. Futures data suggest over a 20 percent chance of a rate reduction at the Fed's July meeting and nearly a 70 percent likelihood that the first cut will arrive by September.

While geopolitical developments capture headlines, domestic economic signals are sending a mixed message. Consumer confidence declined this month, reflecting growing uncertainty. At the same time, concern about the labor market dropped to its lowest level since March 2021, suggesting continued stability in employment.

Market attention is now turning toward upcoming macroeconomic updates. On Thursday, the Commerce Department will release its final GDP figures for the first quarter. Then, on Friday, the closely watched PCE (Personal Consumption Expenditures) report is expected to provide insight into inflation trends, consumer spending habits, and income growth.

U.S. equities closed solidly higher across the board, with the technology sector leading the gains. In contrast, energy stocks took a hit. Easing geopolitical tensions in the Middle East also gave a lift to airline stocks.

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Technology shares topped the charts, while energy companies lagged with a 1.5 percent decline. Airline stocks saw a rebound as tensions in the Middle East appeared to ease, pushing the S&P 1500 Airlines index up by 2.4 percent.

On the downside, defense stocks faltered. Lockheed Martin fell 2.6 percent, and RTX Corp dropped 2.7 percent.

In crypto-related equities, sentiment turned bullish after bitcoin reached a one-week high. Coinbase Global jumped 12.1 percent, while Microstrategy rose 2.7 percent.

Broadcom stock reached new all-time highs after HSBC raised its rating on the semiconductor giant from "hold" to "buy." The endorsement sparked investor enthusiasm, driving the stock up by 3.9 percent during the trading session.

FedEx shares declined more than 4 percent in after-hours trading following the release of quarterly results that failed to meet market expectations, putting pressure on the delivery giant's stock.

Asian equities moved cautiously on Wednesday. While a tentative ceasefire between Israel and Iran has helped to stabilize sentiment, investors remain wary of renewed hostilities. Oil prices lingered near recent lows, reflecting the uncertain outlook.

The US dollar weakened further, nearing a four-year low against the euro. Meanwhile, yields on two-year Treasury notes fell to six-week lows, as lower oil prices eased fears of a sudden spike in inflation.

Despite Israeli officials warning of a forceful response to Iranian missile strikes, the ceasefire announced after President Donald Trump's statement appears to be holding — at least for now.

US stock futures were largely unchanged. The MSCI World Index held steady after reaching a record high the night before.

Crude oil prices showed modest recovery following a sharp decline in the previous sessions.