Wall Street closed mixed on Tuesday, driven by tech and industrial stocks. Investors were upbeat on AI optimism even as the U.S.-Iran situation escalated. Two of the three benchmark indexes ended in the green, while one ended in the red.

How Did the Benchmarks Perform?

The Dow Jones Industrial Average (DJI) fell 0.2%, or 118.02 points, to close at 50,461.68. Twenty-two components of the 30-stock index ended in negative territory, while eight ended in positive.

The tech-heavy Nasdaq Composite added 312.21 points, or 1.2%, to close at 26,656.18. This was a record closing high for the benchmark index.

The S&P 500 gained 45.65 points, or 0.6%, to close at 7,519.12. This was also a record closing high for the benchmark index. Six of the 11 broad sectors of the benchmark index closed in the green. The Technology Select Sector SPDR (XLK), the Industrials Select Sector SPDR (XLI) and the Materials Select Sector SPDR (XLB) advanced 1.7%, 1.5% and 1.4%, respectively, while the Energy Select Sector SPDR (XLE) declined 2.8%.

The fear gauge CBOE Volatility Index (VIX) increased 2.5% to 17.01. A total of 18.85 billion shares were traded on Tuesday, higher than the last 20-session average of 18.71 billion. Advancers outnumbered decliners by a 2.47-to-1 ratio on the NYSE and by a 1.72-to-1 ratio on the Nasdaq.

AI Rally Lifts Wall Street Despite Middle East Tensions

The S&P 500 and Nasdaq closed at fresh record highs on Tuesday as investor enthusiasm surrounding artificial intelligence (AI) outweighed concerns over escalating geopolitical tensions in the Middle East. Markets remained cautious following recent U.S. strikes on Iran and ongoing uncertainty surrounding regional peace talks, but strong momentum in technology shares continued to drive equities higher.

Semiconductor companies led the rally, reflecting sustained optimism about surging demand for AI infrastructure and advanced computing systems. Shares of Micron Technology, Inc. (MU Quick QuoteMU - Free Report) jumped 19.3%, propelling the memory-chip maker to a historic $1 trillion market valuation for the first time. The sharp gain highlighted that AI-related spending by major technology firms will continue to accelerate over the coming years.

The broader technology sector also benefited from expectations of rising data center investments and growing adoption of generative AI applications across industries. While geopolitical developments kept some investors on edge, traders largely focused on corporate growth opportunities tied to AI, which has remained the dominant force behind Wall Street’s recent rally.

Consequently, shares of Advanced Micro Devices, Inc. (AMD Quick QuoteAMD - Free Report) and Marvell Technology, Inc. (MRVL Quick QuoteMRVL - Free Report) added 7.8% and 6.1%, respectively. Both currently carry a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Hopes of De-Escalation Boost Investor Confidence

On Tuesday, markets remained optimistic that tensions between the United States and Iran could ease without a broader conflict. Confidence was supported by comments from U.S. Secretary of State Marco Rubio suggesting a potential deal with Tehran could be reached within days. Reports that Iran was seeking access to frozen overseas funds also reinforced hopes for diplomacy. Despite ongoing military exchanges and reported casualties, investors were encouraged that the fragile ceasefire remained intact, helping Wall Street maintain its risk-on mood.

Economic Data

Per S&P Global, Case-Shiller home prices for 10-City Composites increased 1.2% in March after rising 0.6% in February. Case-Shiller home prices for 20-City Composites increased 1% in March after rising 0.4% in February.

Per the Conference Board, Consumer Confidence in the U.S. for the month of May came in at 93.1, against a consensus estimate of 92.9. The number for April was revised to 93.8 from the previously reported 92.8.