Dow Jones rises as oil tops $100, Fed meeting in focus

US stocks ended higher on Tuesday, extending gains from the previous session as investors weighed rising oil prices, geopolitical tensions in the Middle East, and the start of the Federal Reserve’s two-day policy meeting.

The S&P 500 rose 0.25% to close at 6,716.09, while the Nasdaq Composite gained 0.47% to 22,479.53. The Dow Jones Industrial Average added 46.85 points, or 0.1%, to finish at 46,993.26.

Markets remained sensitive to developments in the Iran conflict, which continues to drive volatility in global energy markets and shape investor sentiment.

Oil surge and geopolitical risks drive sentiment

Oil prices resumed their upward climb on Tuesday, with Brent crude rising around 3% to trade above the $103 per barrel.

The rally followed comments from President Donald Trump suggesting that efforts to form a coalition to secure shipping through the Strait of Hormuz were ongoing, though he later indicated the United States did not require support from NATO allies.

“Fortunately, we have decimated Iran’s Military,” Trump said in a post. “Because of the fact that we have had such Military Success, we no longer “need,” or desire, the NATO Countries’ assistance — WE NEVER DID.”

Stocks eased from session highs following the remarks, while crude prices moved higher, reflecting concerns about prolonged supply disruptions.

Oil prices have surged since the start of US-Israel attacks on Iran amid fears that a sustained closure of the Strait of Hormuz could significantly disrupt global energy supplies.

Investors are also monitoring escalating developments, including reports that Iran’s security chief, Ali Larijani, was killed in overnight airstrikes, according to Israeli Defense Minister Israel Katz.

Travel stocks rebound as energy and discretionary sectors gain

Despite higher oil prices, travel and consumer-facing stocks posted notable gains.

The S&P 500 consumer discretionary sector rose about 1%, led by companies such as Expedia Group and Booking Holdings.

Airline stocks also rebounded after recent declines, with Delta Air Lines rising more than 6% and American Airlines gaining 3.5% after both companies raised revenue guidance for the current quarter.

United Airlines added 3.2%, while Norwegian Cruise Line Holdings climbed over 2%.

Energy stocks led sector gains, rising just over 1% and extending their month-to-date advance to more than 4%. Utilities also moved higher, reflecting a shift toward defensive sectors.

Elsewhere, ride-hailing company Uber gained 4.2% after announcing plans to roll out robotaxis in 28 cities using Nvidia’s autonomous driving software.

Financial stocks also recovered, with Blackstone rising 4.6%, Apollo Global adding 5.3%, and KKR gaining 3.3% after recent losses tied to concerns over private credit markets.

Fed policy outlook and valuation concerns in focus

Investor attention is now turning to the Federal Reserve’s policy decision, with markets widely expecting the central bank to keep interest rates unchanged.

Rate futures suggest expectations have shifted to just one 25-basis-point cut later this year, down from around two before the escalation of the conflict.

Market participants remain cautiously optimistic despite ongoing risks.

Despite the gains, trading volumes remained relatively light, suggesting limited conviction as investors continue to navigate a complex mix of geopolitical and macroeconomic risks.