Key keywords: Wall Street, S&P 500, Nasdaq Composite, Mideast de-escalation, Federal Reserve interest rate cuts, safe-haven assets, crude oil prices, VIX volatility index, Q1 corporate earnings U.S. stocks closed sharply higher across the board on Wednesday, as easing tensions in the Middle East boosted risk appetite and pushed investors back into growth and cyclical assets that sold off sharply earlier in the week. All three major Wall Street benchmarks notched gains of more than 1% for the session, marking their strongest single-day performance in nearly three weeks. The Dow Jones Industrial Average added 430 points, or 1.1%, to end at 38,239, while the S&P 500 rose 1.3% to 5,061, recouping all losses from the previous two trading sessions. The tech-heavy Nasdaq Composite outperformed with a 1.6% gain, lifted by a broad rally in megacap technology and artificial intelligence-related names. Market participants cited growing signals of Mideast de-escalation as the primary catalyst for the rally, after Israeli officials signaled they would hold off on immediate retaliatory strikes against Iran following last weekend’s drone attack. Investors had been pricing in a high risk of a broader regional conflict as recently as Tuesday, which had pushed crude oil prices above $90 per barrel, lifted safe-haven assets like gold and U.S. Treasuries, and dragged equities lower on fears that sustained energy price spikes would reignite inflation and force the Federal Reserve to delay planned interest rate cuts. With de-escalation now seen as the most likely outcome, Brent crude prices fell 2.8% to settle at $84.8 per barrel on Wednesday, erasing all of the conflict-related premium built up over the past week. The 10-year U.S. Treasury yield held steady at 4.58%, as investors pared back bets on extended Fed hawkishness. Fed funds futures data shows that traders are now pricing in a 62% chance of a 25-basis-point interest rate cut by the Fed’s July meeting, up from 49% earlier in the week. The ongoing first-quarter corporate earnings season also added to positive sentiment, with 78% of S&P 500 companies that have reported results so far beating analyst earnings per share expectations, according to data from FactSet. Financial sector stocks, which kicked off earnings season last week, led gains alongside technology and consumer discretionary names on Wednesday. The CBOE Volatility Index, widely known as Wall Street’s “fear gauge”, fell 14% to 15.7, its lowest level in 10 days, as investor anxiety over tail risks faded. Market strategists noted that if de-escalation holds, investor focus will fully shift back to inflation data and Fed policy signals in the coming weeks, which will set the tone for equity performance through the second quarter.