US stocks close up on Iran diplomacy hopes; tech leads rebound

US stocks closed up on Wednesday, after a news report that Iran had signaled openness to talks and a pledge by President Donald Trump to steady oil markets calmed investor anxiety about the Mideast clash.

Investors flocked again to tech shares, lifting the Nasdaq by 1.29% and keeping the tech‑heavy index in positive territory since the US-Israeli strike on Iran, which ignited the conflict in the Middle East. The S&P 500 remained close to its all-time closing high, in January, also helped by positive reports on the US economy.

A New York Times report said Iranian intelligence operatives indirectly reached out to the CIA a day after the attacks, but US officials remain skeptical that either the Trump administration or Iran is prepared for a near-term de-escalation. Trump’s announcements of a US naval escort for oil tankers through the Strait of Hormuz and political risk insurance also brought some relief.

The White House announcement reduced fears of major disruptions in the oil market, which could lift energy prices and pressure inflation, said Jim Awad, senior managing director at Clearstead Advisors LLC in New York. The relief gave investors confidence to scoop up tech-related stocks that sold off heavily in February and were cheap compared with weeks ago, he said.

“That combination is giving the market some optimism, which will be tested over the coming weeks,” Awad said. “It is time to be realistic and not get carried away, either too bullishly or too bearishly.”

The Dow Jones Industrial Average rose 238.14 points, or 0.49%, to 48,739.41, the S&P 500 gained 52.87 points, or 0.78%, to 6,869.50, and the Nasdaq Composite gained 290.79 points, or 1.29%, to 22,807.48.

The prospect of the war spurring additional inflation is one of the main reasons for market volatility on the horizon, said Richard Bernstein, chief executive officer of Richard Bernstein Advisors.

“If people think the war will be short-lived or ‘not an issue’ for the US economy, then the stock market will likely rally,” he said. “The opposite seems true, too. Long-lived and impacting the US economy could mean more volatility.”

The VIX — Wall Street’s “fear gauge,” which tracks expected stock‑market volatility — slipped to around 21, down roughly 10% on the day, signaling that traders were pricing in less near‑term turbulence despite the conflict.

Since the airstrikes over the weekend, the Nasdaq has risen 0.61%, and the small‑cap Russell 2000 is up 0.42%. The S&P 500 is down 0.14% and the Dow has fallen 0.49% this week.

The energy sector led declines on the S&P 500 on Wednesday as stocks that had climbed in recent days on rising oil-price fears reversed course. Exxon Mobil closed down 1.3%, and ConocoPhillips slipped 2.42%.

Several Middle Eastern countries have temporarily halted oil and gas production, and the US was looking to expand its campaign inside Iran.

Oil prices settled unchanged on Wednesday at the end of a volatile trading session. Brent crude settled at USD 81.40 per barrel, flat to Tuesday’s close and at its highest level since January 2025.

US economic activity rose a bit, prices continued to increase, and employment levels were stable in recent weeks, the Federal Reserve said on Wednesday in a report, which also showed economic expectations were optimistic.

Meanwhile, a private survey showed private payrolls increased more than expected in February, while a separate report pointed to strong services activity.

Drugmaker Moderna added 16% after agreeing to pay up to USD 2.25 billion to settle a long-running legal fight over a COVID-19 vaccine patent.

(Reporting by Sabrina Valle in New York; Additional reporting by Johann M Cherian, Ragini Mathur and Pranav Kashyap in Bengaluru; Editing by Maju Samuel and Matthew Lewis)