Dow rises 380 points as investors await Fed decision, SpaceX extends rally

US stocks opened higher on Tuesday, continuing from Monday's strong performance.

The Dow Jones Industrial Average rose 383 points after the blue chip index closed at a record high in the previous session.

The S&P 500 surged 1.65% while the Nasdaq 100 fell 0.19%.

The S&P 500 trades at 32.59 times earnings, compared with 24.63 times for the Dow Jones Industrial Average and 33.10 times for the Nasdaq 100.

Investors shifted their attention to the Federal Reserve's upcoming interest rate decision on Wednesday, which will be the first rate decision under new Fed Chair Kevin Warsh.

Investors also monitored the developments surrounding the preliminary agreement between the United States and Iran.

Markets await first rate decision under Warsh

Investors widely expect the Federal Reserve to leave interest rates unchanged at a range of 3.50% to 3.75%.

However, market participants are closely watching Warsh's comments on inflation, employment, and the broader economic outlook for clues about the future direction of monetary policy.

Inflation remains a key concern for policymakers, with price growth continuing to run above the Federal Reserve's 2% target.

Traders currently assign a 42% probability to a quarter-point rate increase by December, according to CME Group's FedWatch tool.

Meanwhile, the Bank of Japan raised interest rates to their highest level in 31 years on Tuesday as policymakers responded to inflationary pressures linked to higher energy costs.

SpaceX extends gains after blockbuster IPO

SpaceX remained one of the market's biggest focal points following its highly anticipated public market debut last week.

Shares of the Elon Musk-led company continued to advance 7% in trading, building on strong gains recorded since its Nasdaq listing.

The stock has rallied sharply since pricing its initial public offering at $135 per share and has recently traded above $200.

While SpaceX does not have a reported price-to-earnings ratio in the traditional sense, the company's valuation has attracted attention because of its lofty earnings multiple.

At a valuation of approximately $2.2 trillion, SpaceX is effectively being valued at nearly 100 times earnings.

Investors use P/E multiples to gauge a stock’s valuation relative to its anticipated future earnings.

With the growth of online trading apps, tracking such metrics has become significantly easier and more accessible to market participants.

Investor enthusiasm also increased after reports that SpaceX plans to acquire software company Anysphere for $60 billion to expand its presence in the enterprise artificial intelligence market.

The continued rally has pushed SpaceX closer to surpassing Amazon in market value, potentially making it the world's fifth-largest publicly traded company.

Technology shares broadly remained strong.

Micron Technology advanced, while Western Digital and Seagate Technology also posted notable gains as investors continued to favor AI-related semiconductor and data-storage companies.

Qualcomm shares also moved higher after a report indicated the company is in talks to acquire AI chip startup Tenstorrent for between $8 billion and $10 billion.

Iran agreement hopes weigh on oil prices

Markets also continued to react to news that the United States and Iran have reached a preliminary agreement aimed at ending their conflict and reopening the Strait of Hormuz.

President Donald Trump announced that a deal had been reached, while Pakistan Prime Minister Shehbaz Sharif said a formal signing ceremony is expected to take place in Switzerland later this week.

The prospect of renewed oil flows from the Middle East pushed crude prices lower for a second consecutive session.

Brent crude fell below $80 per barrel for the first time since March, while West Texas Intermediate crude dropped toward $77 per barrel.

Lower energy prices have helped ease inflation concerns and supported broader equity markets.