Wall Street’s major indexes were close to closing at record highs as investors remained optimistic about prospects for resolving the Middle East conflict while they assessed the latest batch of bank earnings and US inflation readings.

Talks to end the Iran war could resume in Pakistan within the next two days, US President Donald Trump told the New York Post on Tuesday, after the collapse of talks over the weekend prompted Washington to impose a blockade on Iranian ports.

Meanwhile, the Israeli and Lebanese ambassadors to the US The talks, hosted by Secretary of State Marco Rubio, went with conflicting agendas as Israel demanded Beirut disarm Iran-linked Hezbollah.

With volatile oil prices dramatically affecting inflation expectations, the market is highly sensitive to developments in the Middle East, with any headlines about shocks sending stocks lower, while even tentative signs of an off-ramp are enough to encourage investors eager for positive news.

“We don’t have a resolution yet but investors don’t want to miss out on the rebound,” said Burns McKinney, portfolio manager at NFJ Investment Group in Dallas.

Meanwhile, Tuesday’s inflation data also provided some encouragement as US producer prices rose less than expected in March as the cost of services was unchanged. Ameriprise chief market strategist Anthony Saglimben also pointed to a solid start to the US earnings season as a boost for the stock.

“The market is moving beyond this notion of peak uncertainty. There’s a lot of uncertainty in the market, whether it’s coming from the Iran conflict, fears of AI disruption, inflation concerns or Federal Reserve policy concerns,” Saglimben said.

“Markets are starting to move away from some of the worst-case scenarios for these events and as valuations have improved over the past few weeks and months, investors are now buying bearish.”

According to preliminary data, the S&P 500 gained 80.54 points, or 1.17%, to close at 6,966.78 points, while the Nasdaq Composite gained 452.18 points, or 1.95%, to close at 23,635.92. The Dow Jones Industrial Average rose 317.14 points, or 0.66%, to 48,535.39.

The S&P 500 closing level compares with a record close of 6978.60 in late January. On Monday it closed above its close on February 27 – the last trading day before the start of the US-Israeli war over Iran.

Under the hood, software stocks rose for the second day in a row and the Philadelphia Semiconductor Index hit a new record for the fifth day in a row.

Earnings incentive

On the earnings front, BlackRock shares rose after the asset manager reported a rise in first-quarter profit, strong inflows into its exchange-traded funds and a sharp rise in performance fees.

Shares of Citigroup hit their highest level in nearly two decades after beating first-quarter profit estimates, while Johnson & Johnson shares rose after reporting earnings.

However, JPMorgan received a less enthusiastic reception for its first-quarter results, while Wells Fargo shares fell after interest income fell short of market expectations.

While market reaction was mixed, NFJ’s McKinney said, the earnings reports and executive commentary “show the economy is strong and holding up.”

Meanwhile, shares of United Airlines and American Airlines rose. Citing two unnamed sources, Reuters reported that United CEO Scott Kirby discussed a possible merger with American Airlines with Trump in late February, raising the prospect of a deal that could reshape the industry.

Shares of Globalstar jumped after Amazon.com agreed to buy the satellite company.