The U.S. stock market saw big gains on Tuesday, with the S&P 500 moving closer to its all-time high. The rise came after President Donald Trump announced a ceasefire between Israel and Iran, easing fears of a bigger conflict in the Middle East. Federal Reserve Chair Jerome Powell also reassured investors by saying the central bank would wait before cutting interest rates, as they wanted to see how new tariffs would affect prices.

The S&P 500, one of the most important stock market indexes in the U.S., climbed nearly 1%, while the Nasdaq, which includes many tech companies, jumped 1.35%. The Dow Jones Industrial Average, another key index, also rose by 1%. Many sectors, especially finance and technology, saw strong growth. However, energy stocks dropped because oil prices fell more than 5% after the ceasefire news reduced concerns about disruptions in oil supply from the Gulf region.

Airline stocks, which often suffer when geopolitical tensions rise, gained as travel fears eased. American Airlines and Alaska Air Group both saw their shares rise by 4% and 3.6%, respectively. On the other hand, defense companies like Lockheed Martin and RTX Corp saw their stocks fall, as reduced conflict meant fewer expectations for increased military spending.

The market rally wasn’t just limited to the U.S. Global markets also improved after President Trump called for an end to fighting in the Middle East. This was a big shift from just a few days earlier when tensions were high after the U.S. bombed Iranian nuclear sites and Iran responded by firing missiles at a U.S. base in Qatar. Shortly after the ceasefire began, Israel admitted to striking a radar site near Tehran but said it would not launch further attacks after President Trump spoke with Israeli Prime Minister Benjamin Netanyahu.

Robert Pavlik, a senior portfolio manager at Dakota Wealth, said, "The ceasefire gives the market relief and confidence that the conflict won’t spread further." Investors felt more optimistic knowing that the situation was calming down.

At the same time, Federal Reserve Chair Jerome Powell spoke about interest rates during a congressional testimony. He explained that the Fed was in no hurry to cut rates because they needed to see how new tariffs would affect inflation. President Trump has been critical of Powell for not lowering rates quickly, even suggesting he might replace him.

Atlanta Fed President Raphael Bostic also shared his thoughts, saying the central bank didn’t need to cut rates soon because businesses were planning to raise prices due to higher import taxes, and the job market remained strong. Cleveland Fed President Beth Hammack agreed, saying there was no need for immediate rate cuts since inflation was still above the Fed’s target.

Despite these comments, many investors still expect at least two small rate cuts before the end of the year, with the first one possibly happening in September. Other Fed officials, including Governor Michael Barr and Minneapolis Fed President Neel Kashkari, were also scheduled to speak later in the day, which could influence market movements.

On the economic data front, U.S. consumer confidence unexpectedly dropped in June. People were worried about business conditions and job opportunities in the coming months. This was a surprising shift, as consumer confidence had been strong for much of the year.

Among individual stocks, Tesla shares fell 1.4%, while FedEx rose slightly ahead of its quarterly earnings report. Semiconductor company Broadcom hit a record high after HSBC upgraded its rating from "hold" to "buy," leading to a 3.8% jump in its stock price.

Overall, more stocks were rising than falling on the New York Stock Exchange and the Nasdaq. The S&P 500 recorded 18 new yearly highs, while the Nasdaq had 95 new highs and 44 new lows.

The market’s positive reaction showed how sensitive stocks can be to geopolitical events and central bank policies. When tensions ease, investors feel more confident, leading to higher stock prices. At the same time, the Fed’s cautious approach to interest rates suggests they want to avoid making sudden moves that could disrupt the economy.

For now, traders will keep watching developments in the Middle East and listening to Fed officials for clues about future rate cuts. If the ceasefire holds and inflation starts to slow, the stock market could continue its upward trend. However, any new conflicts or unexpected economic data could change the direction quickly.

In summary, the U.S. stock market had a strong day thanks to hopes for peace in the Middle East and steady signals from the Federal Reserve. While risks remain, investors are feeling more optimistic, pushing major indexes closer to record levels. The coming weeks will be crucial in determining whether this positive momentum continues or if new challenges emerge.