Dow surges 1,125 points as S&P 500 posts best day since May

U.S. equity markets staged a sharp rebound on Tuesday as the Dow Jones Industrial Average climbed roughly 1,125 points and the S&P 500 recorded its largest one-day gain since May. The rally reflected investor relief after a series of reports that signaled a potential de-escalation in the Iran conflict.

The move was driven by a combination of political and diplomatic headlines. The Wall Street Journal reported that President Donald Trump told aides he may be willing to end U.S. military operations even if the Strait of Hormuz remains largely closed, a development that shifted risk calculations among traders. Separately, Iranian President Masoud Pezeshkian said Iran had “the necessary will to end the war” provided guarantees against a recurrence of aggression, further fueling the market’s relief trade.

Sectors across the board participated in the advance, with technology names — led by semiconductor and AI-related stocks such as Nvidia and Marvell — among the strongest contributors to the S&P’s gains. Energy markets reacted as Brent and U.S. crude prices eased in intraday trading, which helped reduce near-term inflation fears and supported cyclical equities. Treasury yields fell, providing an additional tailwind for equities.

The episode underscores how sensitive global markets remain to geopolitical developments that affect oil flows and inflation expectations. While Tuesday’s headlines offered a window of hope, market participants noted that any durable recovery in risk assets will require verifiable progress on diplomatic or security arrangements to keep oil infrastructure and shipping lanes open. The quarter-end rebalancing by funds also amplified the moves.

Market strategists caution that the relief rally could prove temporary if subsequent reports fail to confirm a de-escalation or if new incidents raise supply concerns again. In the near term, oil price trajectories and concrete diplomatic steps will be primary market drivers; analysts recommend preserving liquidity and using selective exposures rather than broad risk-on positioning until clarity improves.