Technology stocks led a broad market advance on Tuesday, propelling the Nasdaq Composite to a new all-time high as crude oil prices retreated from Monday's surge. The S&P 500 gained 0.83% to close at 7,260.23, while the Dow Jones Industrial Average rose 0.56% to 49,215.64. The Nasdaq climbed 1.00% to 25,317.95, setting a fresh record.
Brent crude, the global benchmark, fell 3.31% to $110.65 per barrel, reversing a portion of the sharp gains seen in the prior session. The pullback in oil prices provided relief to growth-oriented stocks, which had been under pressure amid concerns over rising energy costs linked to geopolitical tensions in the Middle East, particularly around the Strait of Hormuz.
Corporate earnings remained a key driver of market sentiment. According to LSEG data, first-quarter S&P 500 earnings growth exceeded 18%, a significant jump from the 12.8% estimate just one month earlier. Of the companies that have reported results, 83% have surpassed profit forecasts, according to S&P Global Market Intelligence. Scott Wren of Wells Fargo Investment Institute described the current environment as a “why ask why” market, where investors continue to focus on earnings and artificial intelligence-related spending, despite ongoing risks.
Jeff Buchbinder, chief equity strategist at LPL Financial, noted that AI-driven capital expenditures are likely to remain a primary driver of earnings growth. The robust earnings season helped offset concerns about inflation and geopolitical uncertainty, with buyers largely ignoring the potential for disruption from the Middle East conflict.
Economic data released Tuesday painted a mixed picture. The Institute for Supply Management’s services PMI eased to 53.6 in April from 54.0 in March, still above the 50 threshold indicating expansion. However, new orders declined sharply, hiring remained in contraction territory, and price pressures held steady at 70.7, suggesting persistent inflation in the services sector.
The labor market showed signs of rebalancing. The March JOLTS report revealed that job openings fell by 56,000 to 6.866 million, while hiring surged by 655,000 to 5.554 million. Carl Weinberg, chief economist at High Frequency Economics, described the data as indicative of a “steady labor market,” but warned that persistent oil prices above $100 could strain that stability.
The Federal Reserve, which maintained its benchmark overnight rate target at 3.5% to 3.75% at its last meeting, cited persistent inflation and “a high level of uncertainty” stemming from Middle East events. The central bank’s cautious stance kept traders focused on every move in oil prices and labor data for clues on the timing of any rate cut.
Technology shares were the standout performers, with Intel in the spotlight after Bloomberg News reported that Apple has held early discussions with both Intel and Samsung Electronics about producing main chips for its devices. Advanced Micro Devices also drew attention as investors awaited its quarterly results after the closing bell. Joe Saluzzi, co-head of equity trading at Themis Trading, emphasized that earnings must support current valuations, noting, “You need the earnings to support where you are.”
Gains extended beyond mega-cap tech. DuPont shares rose after the company raised its full-year profit outlook. Archer-Daniels-Midland jumped on stronger-than-expected first-quarter earnings, and Pinterest advanced following upbeat second-quarter revenue guidance. On both the New York Stock Exchange and Nasdaq, advancing stocks outnumbered decliners, reflecting broad-based market strength.
Despite the day’s rally, risks remain on the horizon. Dean Chen, analyst at Bitunix Exchange, pointed to concerns over global shipping routes, insurance costs, and the broader supply-chain outlook. Continued disruption in the Strait of Hormuz could lead to higher costs for fuel, freight, and raw materials, potentially stoking inflation, keeping Treasury yields elevated, and posing headwinds for any sustained equity rebound. While oil prices fell on Tuesday, they remain at elevated levels, underscoring the fragility of the current market optimism.
