Stocks advanced broadly Tuesday as the market switched into risk-on mode on news of a ceasefire in the war between Iran and Israel. The Dow Jones industrial average gained 1.2 percent, the S&P 500 rose 1.1 percent, and the Nasdaq was up 1.4 percent. US Treasury yields and the dollar declined and oil prices dropped for a second day.

Iran and Israel accused each other of violating the ceasefire but investors judged it was holding. Oil prices dropped again as the market saw the suspension in the conflict leaving oil flowing from the Middle East. President Trump's comment that he hoped China would buy Iranian oil sent oil prices still lower as it suggested the US would agree to end sanctions against Iranian oil sales.

Separately, the market was not fazed by Federal Reserve Chair Jerome Powell's reiteration of his stance that rates remain on hold pending clarity on the impact of tariffs. Traders have fastened on comments from Fed governors Waller and Bowman that tariff effects are likely to be short lived and that the Fed should consider rate cuts in July. A weak U.S. consumer confidence report added to expectations of rate cuts and sent market rates lower.

Cyclical stocks including small caps outperformed Tuesday, as did megacaps at the other end of the spectrum.

Market Reflections track market reaction to the trading day's major events. Economic data, policymaker speeches, and company news are featured in this report as well as key indexes and financial instruments.

Understanding why markets respond as they do is fundamental for an investor. Market Reflections help explain how the day's events, news, and data impact the outlook for the economy and for market prices.