Stocks edged higher on Tuesday as a sharp drop in crude oil prices eased inflation concerns and pushed bond yields lower across the board.

The S&P 500 Index (SPY) closed up by +0.32%, the Dow Jones Industrial Average (DIA) gained +0.30%, and the Nasdaq 100 Index (QQQ) advanced +0.64%.

WTI crude oil fell more than 3% on Tuesday, pulling the 10-year Treasury note yield down by roughly 6 basis points to 4.64%.

Crude prices tumbled after The New York Times reported the US State Department is preparing to return diplomats to Middle East embassies evacuated before and during the war with Iran.

The report suggested the Trump administration does not anticipate a return to all-out hostilities with Iran, significantly easing geopolitical risk premiums embedded in energy markets.

Chipmakers and AI-infrastructure stocks also moved higher on Tuesday, with short covering emerging ahead of Nvidia’s (NASDAQ: NVDA) quarterly earnings results expected after the close on Wednesday.

Marvell Technology (NASDAQ: MRVL) and Advanced Micro Devices (NASDAQ: AMD) each closed up more than 4%, while Seagate Technology Holdings (NASDAQ: STX) gained more than 3%.

Gains were capped, however, by weaker-than-expected US economic data, including a drop in July new home sales of 10.5% month-over-month to a 6-month low of 607,000, against expectations of 620,000.

The Conference Board’s August consumer confidence index fell 0.8 points to a 7-month low of 89.4, missing the consensus estimate of 90.2.

Boston Fed President Susan Collins added a hawkish tone, stating: “Maintaining the current federal funds rate target range will require continued evidence that inflation is indeed coming down, and should evidence of sustained inflation progress not materialize, I believe it will be appropriate to tighten policy soon.”

Markets are currently pricing in a 39% chance of a 25 basis point rate hike at the next FOMC meeting on September 15-16, and a 95% chance of a similar ECB hike at its September 10 meeting.

Dick’s Sporting Goods (NYSE: DKS) was the session’s most notable decliner, plunging more than 30% after reporting Q2 net sales of $5.59 billion, missing the consensus of $5.65 billion, and cutting its 2027 net sales forecast to between $21.9 billion and $22.2 billion from a prior range of $22.1 billion to $22.4 billion.

The Dick’s guidance cut weighed on other apparel names, with Lululemon Athletica (NASDAQ: LULU), Kohl’s (NYSE: KSS), Deckers Outdoors (NYSE: DECK), and Abercrombie & Fitch (NYSE: ANF) all closing down more than 3%.

Moderna (NASDAQ: MRNA) led S&P 500 gainers with a rise of more than 14% after Wolfe Research upgraded the stock to peer perform from underperform.

Cryptocurrency-exposed stocks surged after Bitcoin posted a 3.25-month high, with Galaxy Digital Holdings (NASDAQ: GLXY) climbing more than 8% and MARA Holdings (NASDAQ: MARA) and Riot Platforms (NASDAQ: RIOT) each rising more than 6%.

Energy producers broadly retreated alongside crude prices, with APA Corp (NASDAQ: APA) falling more than 3% and Devon Energy (NYSE: DVN), Diamondback Energy (NASDAQ: FANG), and Halliburton (NYSE: HAL) each shedding more than 2%.

On the earnings outlook, the S&P 500 is tracking for Q2 earnings growth of nearly 32%, well above initial projections of 23% and nearly four times the average growth rate outside the Covid period since Q4 of 2013, according to Bloomberg Intelligence.

AI infrastructure stocks alone are expected to contribute nearly 60% of the S&P 500’s earnings-per-share growth in Q2, with 86% of the 468 companies that have reported so far beating estimates, according to Bloomberg data.