NEW YORK: US stocks rallied more than 1 per cent on Tuesday (Jun 24) as investors welcomed a fragile truce with Israel and Iran while parsing Federal Reserve Chair Jerome Powell’s congressional testimony for clues regarding the US central bank’s path forward.
All three major US stock indexes closed with their second straight session of solid gains following US missile strikes on Iran’s uranium enrichment assets.
The benchmark S&P 500 grew within striking distance of its all-time closing high reached on Feb 19.
Late Monday, US President Donald Trump announced a cease-fire agreement, which Israel appeared to have violated.
Still, investors viewed the cease-fire rhetoric as a sign of de-escalating tensions.
“The bulls are out of their bucking shoots,” said Greg Bassuk, Chief Executive Officer at AXS Investments in New York. “The cease-fire really adding fire to the stock market rally. We believe investors are wagering that calm in the Middle East is really a boon for stocks even as it weighs down bonds and oil prices.”
Crude prices slid on waning supply concerns related to the conflict, dragging energy shares lower.
Powell, speaking before the US House of Representatives Financial Services Committee, reiterated his view that rate cuts can wait until the economic effects of tariff increases are better known, adding: “We are well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance.”
Financial markets have been pricing in a more than 20 per cent likelihood that the Fed will lower its key interest rate at the conclusion of its July policy meeting, and a near 70 per cent probability that its first rate cut will land in September.