Global stock markets rose on Tuesday, driven by artificial intelligence trading, with the S&P 500 marking its longest winning streak in over a year before the advance in U.S. equities paused. Concurrently, investors are assessing the prospects for an end to the Middle East conflict.

Technology shares continued to boost European and Asian markets. The pan-European STOXX 600 index gained nearly 0.8% in early trading, lifted by tech stocks after chipmaker STMicroelectronics issued strong earnings guidance. Germany's DAX index rose 0.8%; France's CAC 40 climbed 0.8%; Italy's FTSE MIB increased by 1%; AI-related stocks also pushed the Dutch AEX index up 0.9%; London's FTSE 100 edged up 0.25%; and Spain's IBEX 35 advanced 0.75%.

Asian markets were mixed on Tuesday as investors digested developments in Middle East peace talks alongside a series of AI-related news. NVIDIA unveiled the first prototypes for a new generation of AI-powered personal laptops at its annual Computex event, designed to run AI "agents." Positive sentiment lifted shares in its supply chain companies. China's Shanghai Composite Index gained 0.4%, while the tech-heavy ChiNext Index surged 2.7%. Hong Kong's Hang Seng Index rose 2.45%. South Korea's KOSPI index managed a 0.1% gain after falling for most of the session, and Japan's Nikkei 225 pared earlier losses to close down 0.3%.

AI Momentum Continues

Futures for the S&P 500 and Nasdaq 100 both fell about 0.1%, signaling a potentially weaker open for U.S. stocks. This follows both indices closing at fresh highs on Monday, marking their eighth consecutive day of gains. Hewlett Packard Enterprise surged 28% in pre-market trading as demand for its servers and networking equipment soared, driven by the AI boom.

Deutsche Bank strategist Jim Reid noted, "This is the first time in a year the S&P 500 has posted eight consecutive daily gains. Looking at the weekly trend, if it rises again this week, it would be the index's 10th straight weekly gain, a feat not seen since 1985."

In Taipei, NVIDIA CEO Jensen Huang stated the company has sufficient supply to support strong growth in both CPUs and GPUs, but acknowledged supply constraints remain a concern.

Anthropic announced on Monday it had confidentially filed for a U.S. initial public offering, taking a lead over rival OpenAI in the closely watched race to go public. Alphabet, Google's parent, is also seeking to raise $80 billion through equity financing to support its AI infrastructure expansion.

Russ Mould, Investment Director at AJ Bell, commented, "This reflects the enormous scale of funding required to keep pace in the AI arms race. It marks a significant shift: companies are moving from a phase of abundant free cash flow to turning to capital markets to help finance expansion."

Oil Remains Focused on US-Iran Situation

Brent crude retreated, falling 1.9% to trade around $93 per barrel after posting its largest gain in about a month. West Texas Intermediate futures also declined 0.9% to $91.31. Both had closed up more than 4% on Monday. Analysts at ING stated, "Oil price action continues to be dominated by Iran-related news, given the considerable uncertainty over the progress of US-Iran negotiations."

U.S. President Donald Trump remains optimistic that a provisional peace agreement with Iran could be reached "within the next week." This follows threats from Iran that it might suspend talks due to escalating Israeli attacks in Lebanon.

U.S. Treasury yields and the dollar retreated from overnight highs after the Lebanese embassy in the U.S. indicated it had received confirmation that Hezbollah had accepted parts of a U.S.-proposed ceasefire plan. Preventing Israel from expanding its offensive in Lebanon is increasingly central to the U.S. push for a deal to reopen the Strait of Hormuz.

Tug of War Between Two Forces

Traders are weighing two opposing forces: unprecedented optimism about the economic potential of artificial intelligence on one side, and a Middle East war that has caused historic disruptions in the oil market on the other. With uncertainty over the likelihood of a deal, traders must consider both scenarios where crude prices could retreat sharply or surge to multi-year highs.

Stephan Kemper, Chief Investment Strategist at BNP Paribas Wealth Management, said, "We may be approaching a point where optimism about the long-term positive impact of building out AI will collide with the wall of higher yields, elevated inflation, and slowing growth."

Bitcoin Falls Below $70,000

In currency markets, the dollar held broadly steady. The euro was last at $1.1643, still 1.5% below its level at the outbreak of the war.

Data showed Eurozone core inflation rose 2.5% year-on-year in May, above market expectations of 2.4% and April's 2.1%. Money markets are pricing in a 25-basis-point rate hike from the European Central Bank this month and expect at least one more hike before year-end.

Bitcoin fell below $70,000, hitting a near two-month low, following news that Strategy had sold Bitcoin for the first time since 2022, coupled with ongoing Middle East tensions. Strategy announced on Monday it sold 32 bitcoins last week for approximately $2.5 million. David Morrison, an analyst at Trade Nation, noted in a report, "Sentiment towards Bitcoin has deteriorated rapidly."

Bond Market Catches a Breather

The bond market found some relief. According to Tradeweb data, the yield on the 10-year U.S. Treasury note fell 4.4 basis points to 4.433%, while the 30-year yield declined 3.8 basis points to 4.953%.

U.S. Treasuries have been sold off in recent weeks as investors increasingly bet the Federal Reserve may need to keep rates higher for longer to curb the worst inflation surge since 2023. This move has also raised questions about whether the rising U.S. debt burden and AI financing needs are pushing yields higher.

Alessandro Gabellone, Fixed Income Analyst at Bank Degroof Petercam, said, "U.S. data, such as the ISM manufacturing figures we just saw, keep the Fed/inflation debate alive and limit room for a dovish reassessment of rates, especially with oil prices still volatile."

On the macro front, the Institute for Supply Management reported on Monday that the U.S. manufacturing PMI rose to 54.0 in May from 52.7 in April, beating expectations and hitting a four-year high. This may have been driven by businesses placing orders early amid war-related price increases and supply concerns.

The yield on Japan's 10-year government bond fell 10 basis points following a well-received bond auction. The yen stabilized around 159.70 per dollar after Japan's Finance Minister Satsuki Katayama stated authorities were prepared to act in the foreign exchange market if necessary.

Gold prices rose in early trading, with New York futures up 1.2% to $4,562.40. Analysts at Saxo Bank noted, "Gold continues to take its cue from the oil market, given crude's impact on inflation expectations and, in turn, interest rates, bond yields, and the dollar."

Stocks in Focus

Marvell Technology surged 25% after NVIDIA CEO Jensen Huang suggested the company could be the next to reach a trillion-dollar market valuation.

Hewlett Packard Enterprise issued quarterly profit and revenue guidance that exceeded analyst expectations and raised its full-year profit target, sending its shares soaring 25%.

Victoria's Secret & Co. reported first-quarter earnings that beat estimates, saw a decline in tax costs, and subsequently raised its full-year guidance. The company now expects full-year revenue of $7.03 billion to $7.13 billion, up from a prior range of $6.85 billion to $6.95 billion. Its stock price skyrocketed over 35%.

Credo Technology Group, which specializes in AI interconnect cables and chips, reported fourth-quarter revenue and profit that both beat market expectations: adjusted earnings per share were $1.16 on revenue of $437 million, versus expectations of $1.03 per share and $432 million in revenue. Its current-quarter revenue guidance also topped consensus. However, its shares still fell 3%.

Microchip Technology shares rose 12% after disclosing data center business revenue: the segment generated $302.7 million in 2025, and the company expects segment revenue to grow approximately 65% year-over-year in the 2026 calendar year. Revenue for the quarter ending March 2026 surged 62.9% year-over-year.

Shares of Alphabet, Google's parent, fell 2.8% after it disclosed plans for a total equity offering of $80 billion, which includes a $10 billion subscription from Berkshire Hathaway.

STMicroelectronics raised its data center business revenue target from "significantly above $500 million" to aiming for approximately $1 billion by 2026. Its stock gained over 10%.