The S&P 500 and Nasdaq advanced on Tuesday as solid big bank results and a cooler-than-expected inflation report boosted risk appetite amid rising Middle East tensions.

A rebound in chip shares led the Nasdaq, while the Dow’s gains were slower. The Labor Department’s consumer ⁠price index showed inflation cooled more than analysts expected in June, largely due to easing energy price pressures amid signs of progress last month in US-Iran peace talks. The US Federal Reserve Chairman Kevin Warsh sat for his first congressional testimony since his confirmation, outlining the central bank’s plan to contain upward price pressures. Warsh’s testimony came as the battle for control of the Strait of Hormuz led to increased airstrikes between the United States and Iran and spiked crude oil prices, rekindling fears of upward pressure on prices.

Still, following the CPI report, financial markets were pricing in an 83.4% probability that the Fed will leave its key interest rate unchanged at the conclusion of its July policy meeting, up from 58.3% on Monday. Markets expect at least one 25-basis-point rate hike before the end of the year, according to CME’s FedWatch tool.

“The inflation report appears to have weakened the Fed’s case for raising rates,” said Chuck Carlson, chief executive of Horizon Investment Services in Hammond, Indiana. “That gives the feds cover, for now.”

“(Warsh) says we can bring inflation down, and he wants to hear what people have to say,” Carlson added. “And maybe inflation will come down without raising rates.”

Earnings Season Begins Second-quarter earnings season begins with five major US banks reporting solid results, buoyed by trading strength and dealmaking. Goldman Sachs rose after second-quarter profit beat expectations, as dealmaking sped up and geopolitical uncertainties boosted its trading business. JPMorgan Chase and Bank of America both advanced after posting consensus-beating profits. But Citigroup fell as its profits fell due to cost concerns. Wells Fargo also made cuts.

“It’s a big earnings week, so we finally get to hear from corporate America,” said Tom Heinlin, national investment strategist at US Bank Asset Management in Minneapolis. “What we continue to see from the banks is what are they looking at in terms of customer health? So far, good news on that front.” IBM shares fell after the company warned that second-quarter revenue would fall short of estimates.

According to preliminary data, the S&P 500 gained 28.69 points, or 0.38%, to close at 7,544.03 points, while the Nasdaq Composite gained 236.48 points, or 0.91%, to close at 26,109.65. The Dow Jones Industrial Average rose 28.92 points, or 0.05%, to 52,527.56.