Dow gains 270 points as chip stocks rally, oil prices retreat

US stocks moved higher on Tuesday as semiconductor shares extended their recovery from last week's sharp selloff, while easing tensions in the Middle East and lower oil prices helped improve investor sentiment.

The Dow Jones Industrial Average advanced 272 points. The S&P 500 rose about 0.7% while the Nasdaq Composite gained 0.88%.

The gains followed a rebound on Monday, when technology stocks recovered part of the losses suffered during Friday's broad market selloff.

Investors continued to return to chipmakers after concerns about valuations and interest rates triggered heavy profit-taking across the sector last week.

Chip stocks extend rebound

Semiconductor companies led gains for a second consecutive session as investors sought opportunities following last week's steep decline.

Shares of Micron Technology rose nearly 3.01% in early trading after surging about 10% on Monday.

The stock had fallen roughly 20% during the two sessions ending last week, including a 13% drop on Friday.

Broadcom and Micron advanced 0.8% and 2.8%, respectively.

The iShares Semiconductor ETF climbed another 1.6% after rebounding 6% on Monday. The fund had suffered a 10% decline on Friday, its worst single-day performance in more than six years.

Middle East developments ease pressure on markets

Investor sentiment also benefited from signs that tensions between Iran and Israel may be easing.

Oil prices fell more than 2%, with West Texas Intermediate crude dropping below $90 per barrel after President Donald Trump said a deal between the United States and Iran could be reached in "two or three days" that would reopen the Strait of Hormuz "immediately."

Iran and Israel both indicated on Monday that attacks had ceased following Trump's appeal for an end to hostilities.

However, uncertainty remained after Iranian officials warned military action could resume if Israeli operations in Lebanon continue.

Israeli Prime Minister Benjamin Netanyahu later said the conflict with Iran and Hezbollah was "not yet over."

The decline in oil prices helped alleviate concerns about inflationary pressures linked to higher energy costs, though investors remain cautious as diplomatic efforts continue.

Investors eye inflation data and major IPOs

Market participants are now turning their attention to upcoming economic data and a series of high-profile corporate developments.

Consumer price index data for May is scheduled for release on Wednesday and could offer fresh clues about how rising energy costs are affecting inflation.

Friday's stronger-than-expected jobs report increased concerns that the Federal Reserve may raise interest rates later this year.

According to CME Group's FedWatch tool, traders are pricing in a 43% probability of a 25-basis-point rate increase in December.

At the same time, investors are preparing for SpaceX's expected public market debut on Friday. The company is seeking to raise $75 billion at a reported valuation of $1.75 trillion, making it the largest IPO on record.

The offering is viewed by many investors as another major test of enthusiasm surrounding artificial intelligence-related investments.

OpenAI also added to the excitement around the AI sector after announcing on Monday that it had confidentially filed for a US initial public offering.

Still, some market participants remain cautious about the long-term outlook for semiconductor stocks.

Elsewhere, shares of Applied Digital rose 8.5% after the company signed a 15-year lease agreement expected to generate approximately $5.2 billion in revenue.

Nuvalent surged nearly 38% after GSK agreed to acquire the cancer drug developer for $10.6 billion.