Wall Street’s main indexes traded near record highs on Tuesday, with AI-fueled optimism offsetting concerns over Middle East peace talks after recent U.S. strikes on Iran.

U.S. Secretary of State Marco Rubio said that the deal with Tehran could “take a few days,” while Iran’s Tasnim news agency reported that Tehran was seeking the release of $24 billion of Iranian funds frozen overseas.

“It’s cautious optimism in markets today with a singular focus on planning an off-ramp for this war, but with an understanding that it will take a while for energy prices and inflation (to) come back to earth,” said Art Hogan, chief market strategist at B Riley Wealth.

Brent crude oil rose as much as 2.7% but remained below $100 a barrel, while global stocks wavered as uncertainty lingered over whether a deal would be reached to open up shipping flows through the Strait of Hormuz.

Semiconductor stocks, which have surged on AI-driven demand, led gains. Micron jumped 13.3% and Marvell Technology rose 7.4%, while Intel and Qualcomm added 1.6% each. The Philadelphia SE Semiconductor index rose 4.1% to an all-time high.

Major Markets Rise

At 10:02 a.m. ET, the Dow Jones Industrial Average rose 73.76 points, or 0.15%, to 50,653.46, the S&P 500 gained 53.34 points, or 0.71%, to 7,526.81 and the Nasdaq Composite gained 295.88 points, or 1.12%, to 26,639.85.

The S&P 500 and the Russel 2000 both touched intraday record highs on Tuesday, underscoring the strength of the recent rally.

Eight of the 11 main S&P sectors were in the green, with the S&P 500 information technology subindex leading gains with a rise of 1.5%.

Upbeat earnings and renewed confidence in AI trade have driven U.S. equities higher despite the ongoing conflict with Iran, with investors now turning their attention to IPOs of some of the largest private AI companies, including SpaceX.

Shares of space companies jumped, with Intuitive Machines gaining 16%, while Planet Labs and Rocket Lab were up 13.5% and 5%, respectively.

With the earnings season nearly over, first-quarter earnings growth is expected to be 29% year-on-year compared with the 16.1% estimated a month ago, according to LSEG data from Friday.

Kevin Warsh was sworn in as chair of the Federal Reserve on Friday. His appointment comes amid growing concerns about inflation, driven by higher oil prices, which have added to expectations of tighter global monetary policy.

Markets currently expect the Fed to keep rates on hold for the rest of the year, with a 25 bps rate hike seen in December.

Advancing issues outnumbered decliners by a 3.13-to-1 ratio on the NYSE, and by a 2.27-to-1 ratio on the Nasdaq.

The S&P 500 posted 30 new 52-week highs and one new low while the Nasdaq Composite recorded 128 new highs and 42 new lows.

(Reporting by Twesha Dikshit and Utkarsh Hathi in Bengaluru; Editing by Shinjini Ganguli)