AI Optimism Fuels Record Highs as Middle East Tensions Escalate

U.S. stock markets closed at record highs on Tuesday, fueled by optimism in the artificial intelligence sector, despite ongoing tensions in the Middle East and uncertainty over the war between Washington and Tehran.

The S&P 500 closed above 7,600 for the first time, while the Dow Jones index added more than 200 points to close 0.45% higher. The Nasdaq Composite was up 0.03% at close.

U.S. President Donald Trump said in a post on Truth Social that conversations with Iran are ongoing, dismissing reports of strained relations between the two countries. However, the United States military's Central Command (CENTCOM) has reportedly carried out 'self-defense' strikes on Iran's Qeshm Island after attacks on Kuwait and Bahrain.

Investors will closely watch for the May ADP National Employment Report, along with fresh housing and manufacturing data. Markets will also look to the Federal Reserve's Beige Book for insights into current economic conditions and regional business activity.