U.S. stocks soared on Tuesday, with investors swept up in a massive relief rally on renewed Middle East de-escalation hopes.
Messaging around the ongoing U.S.-Israel operation against Iran took a positive turn after a report that President Donald Trump was telling aides he would be open to exiting the war without having largely reopened the Strait of Hormuz.
Meanwhile, Iran’s state TV reported that the country was "prepared to end" the war if offered security guarantees, citing president Masoud Pezeshkian.
The benchmark S&P 500 index advanced 2.9% to end at 6,528.99 points, the tech-heavy NASDAQ Composite jumped 3.8% to close at 21,590.63 points, and the blue-chip Dow Jones Industrial Average added 2.5% to conclude at 46,341.21 points.
Track U.S. stocks with InvestingPro - now 50% off "Equity markets became excited overnight at the prospect President Trump is willing to exit the war with Iran soon regardless of whether the Strait of Hormuz is open. The rally gained additional momentum on reports that Iranian President Masoud Pezeshkian wants to end the war, but is seeking guarantees," Michael O’Rourke, chief market strategist at Jones Trading, told Investing.com.
"There are doubts among market participants that either of these developments equates to real progress, but the equity market is bouncing and oil is pulling back. As long as oil continues to correct, equities will likely sustain the rally," O’Rourke added.
Tuesday’s massive session helped the Nasdaq exit correction territory a day after the Dow. The three main averages still posted hefty losses for March, with the S&P down 5.1% and the Nasdaq down 4.8%. Both gauges saw their worst monthly performance since March 2025. The Dow slumped 5.4% for March, its biggest monthly loss since September 2022.
Trump says Iran war won’t last ’much longer’ The Wall Street Journal reported that Trump would be open to concluding the more than month-old military campaign despite Iran holding firm control over the critical Strait of Hormuz. Its effective closure for weeks has fueled a sharp spike in global oil prices and worries over recession in countries around the world.
Trump and his aides have assessed that a mission to unblock the strait would push the timeline for the assault beyond his four to six-week timeline, the WSJ reported.
The president instead decided that the U.S. should hit Iran’s navy and missile stocks hard and pursue a draw down in hostilities while pressuring Tehran through diplomacy, the report noted, citing administration officials who added that Washington would lean on allies in Europe and the Persian Gulf to take the lead on the strait should those efforts fail.
Trump later told the New York Post that the war won’t last "much longer" and that the strait will "automatically" reopen.
The Strait of Hormuz has become a key point of focus for the conflict, with Tehran having effectively blocked the passage with mines and missile strikes. Roughly a one-fifth of the world’s oil flows through the narrow waterway off of Iran’s southern coast.
