Wall St gains as AI, earnings momentum outweigh Middle East angst

Wall Street’s main indexes inched higher on Tuesday as renewed artificial intelligence optimism and strong corporate earnings bolstered markets battered by constant back-and-forth over the resolution of the Middle East conflict.

J.P. Morgan raised its year-end target for the S&P 500, citing AI and tech-driven earnings, while Amazon said on Monday it will invest up to $25 billion in Anthropic, signaling Big Tech is still willing to pour money into AI.

Amazon shares rose 2%, helping the S&P 500 consumer discretionary sector jump nearly 1% to become the biggest gainer on the benchmark. A 0.5% decline in the healthcare sector limited gains in the S&P 500.

Investors are also awaiting the Senate confirmation hearing for Kevin Warsh, U.S. President Donald Trump’s nominee to lead the Federal Reserve.

Republican Senator Thom Tillis has promised to block the confirmation until the Department of Justice ends an investigation into Fed Chair Jerome Powell that Tillis says threatens the central bank’s independence.

The hearing could have far-reaching implications for monetary policy, especially as Trump has vowed to fire Powell if he does not leave when his term ends in May.

At 09:45 a.m. ET, the Dow Jones Industrial Average rose 309.83 points, or 0.63%, to 49,752.39, the S&P 500 gained 12.30 points, or 0.17%, to 7,121.44 and the Nasdaq Composite gained 34.10 points, or 0.14%, to 24,438.49.

Despite the uncertainty, AI hopes and upbeat earnings prevented investors from retreating to the sidelines.

Of the 48 companies in the benchmark S&P 500 index that reported earnings as of last Friday, 87.5% surpassed analysts’ estimates, compared with a long-term average of 67.4%, according to LSEG data.

The earnings have been strong and are overpowering the narrative, said Thomas Hayes, chairman at Great Hill Capital.

UnitedHealth jumped 9.2% after the healthcare conglomerate raised its annual profit forecast and beat Wall Street expectations for the first quarter. The stock was the biggest boost to the blue-chip Dow.

Peers CVS Health and Humana rose 1.7% and 5.2%, respectively.

GE Aerospace fell 3.1%. The company said it was bracing for a tougher backdrop of elevated oil prices, fuel supply constraints and slower global growth.

War fuels volatility

Markets have been pulled in opposite directions by a torrent of conflicting headlines in recent days.

On Friday, Tehran’s vow to reopen the Strait of Hormuz – a crucial waterway for oil shipping – briefly sparked hopes for de-escalation, which quickly faded over the weekend when Iran fired what appeared to be warning shots at vessels and the U.S. military seized an Iranian cargo ship.

In an interview with CNBC on Tuesday, Trump said the U.S. would end up with a “great deal” with Iran. However, uncertainty around the end of the two-week ceasefire loomed.

Alaska Air fell 1.3% as the airline withdrew its full-year profit forecast.

Apple was among the other stocks under the spotlight, falling 0.5% after the company said CEO Tim Cook would hand over the reins to longtime hardware boss John Ternus.

Separately, data showed that U.S. retail sales increased more than expected in March.

Advancing issues outnumbered decliners by a 1.44-to-1 ratio on the NYSE and by a 1.07-to-1 ratio on the Nasdaq.

The S&P 500 posted 41 new 52-week highs and 2 new lows, while the Nasdaq Composite recorded 100 new highs and 23 new lows.