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The benchmark S&P 500 and the tech-heavy Nasdaq Composite touched intraday record highs on Thursday, buoyed by optimism surrounding a ceasefire between Israel and Lebanon.

The rally reflected growing investor confidence that the worst phase of the Middle East conflict may have passed.

Ceasefire Signals Boost Markets

U.S. President Donald Trump said Israel and Lebanon had agreed to a 10-day ceasefire, potentially easing a key obstacle to a broader peace agreement in the region.

“Seasoned investors understand that markets as a whole do not wait for certainty. The market is walking away from worst-case scenarios and rightfully so,” said Anthony Saglimbene, chief market strategist at Ameriprise Financial.

At 11:38 a.m. ET, the Dow Jones Industrial Average rose 30.41 points, or 0.06%, to 48,494.13. The S&P 500 gained 19.26 points, or 0.27%, to 7,041.34, while the Nasdaq Composite added 90.38 points, or 0.38%, to 24,106.40.

Optimism Tempered By Caution

Analysts noted that markets were reacting more to sentiment than fundamentals.

“When momentum rules, fundamentals are optional. Investors have decided that the worst of the conflict is behind us, if not completely solved,” said Steve Sosnick, chief strategist at Interactive Brokers.

Despite the gains, volatility persisted, with indexes briefly slipping into negative territory earlier in the session, highlighting the fragile nature of the rally.

“It is difficult to discern why investors are so optimistic,” said Melissa Brown, managing director of investment decision research at SimCorp. “The economic data does not really justify the high degree of enthusiasm.”

Earnings Season Drives Stock Moves

Corporate earnings also played a role in shaping market direction.

PepsiCo rose 2% after beating quarterly profit estimates, while Abbott Laboratories fell 4.3% to its lowest level since November 2023 after cutting its full-year profit forecast.

Charles Schwab and Travelers declined 5.3% and nearly 1%, respectively, following their results.

Netflix shares were 0.6% higher ahead of its earnings release after market close.

Sectoral Gains And Market Movers

Software stocks and energy shares gained 1.6% and 1.4%, respectively, contributing to the broader rally.

Among notable movers, Myseum more than doubled after rebranding as Myseum.AI, echoing last year’s surge in companies pivoting to new strategies.

Voyager Technologies rose 5.2% after NASA signed an order for the company to conduct its seventh private astronaut mission to the International Space Station.

Market Breadth Remains Positive

Advancing issues outnumbered decliners by a 1.33-to-1 ratio on the NYSE and a 1.09-to-1 ratio on the Nasdaq.

The NYSE recorded 182 new highs and 29 new lows. The S&P 500 posted 18 new 52-week highs and one new low, while the Nasdaq Composite registered 89 new highs and 32 new lows.