US STOCKS-Wall St ends sharply higher, S&P 500 nears record high as Middle East tensions cool

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Fed Chair Powell reiterates "wait and see" approach to rate cuts, tariffs

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US airlines rise on hopes of end to Israel-Iran conflict

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Broadcom (AVGO) hits record peak after brokerage upgrades

(Updates to market close)

By Stephen Culp

NEW YORK, June 24 (Reuters) - U.S. stocks rallied more than 1% on Tuesday as investors welcomed a fragile truce with Israel and Iran while parsing Federal Reserve Chair Jerome Powell's congressional testimony for clues regarding the U.S. central bank's path forward.

All three major U.S. stock indexes closed with their second straight session of solid gains following U.S. missile strikes on Iran's uranium enrichment assets.

The benchmark S&P 500 grew within striking distance of its all-time closing high reached on February 19.

Late Monday, U.S. President Donald Trump announced a cease-fire agreement, which Israel appeared to have violated.

Still, investors viewed the cease-fire rhetoric as a sign of de-escalating tensions.

"The bulls are out of their bucking shoots," said Greg Bassuk, Chief Executive Officer at AXS Investments in New York. "The cease-fire really adding fire to the stock market rally. We believe investors are wagering that calm in the Middle East is really a boon for stocks even as it weighs down bonds and oil prices."

Crude prices slid on waning supply concerns related to the conflict, dragging energy shares lower.

Powell, speaking before the U.S. House of Representatives Financial Services Committee, reiterated his view that rate cuts can wait until the economic effects of tariff increases are better known, adding "we are well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance."

Financial markets have been pricing in a more than 20% likelihood that the Fed will lower its key interest rate at the conclusion of its July policy meeting, and a near 70% probability that its first rate cut will land in September.

On the economic front, consumer confidence deteriorated this month, with pessimism toward the jobs market falling to its lowest level since March 2021.

"Consumer confidence was down," Bassuk added. "And as we see these economic data points casting a shadow over the strength of the U.S. economy, it's another factor pointing toward greater likelihood of Fed rate cuts this year."

The Commerce Department is expected to release its final take on first-quarter GDP on Thursday, and on Friday its closely watched Personal Consumption Expenditures (PCE) report will shed light on inflation, consumer spending and income growth.

According to preliminary data, the S&P 500 gained 67.34 points, or 1.12%, to end at 6,092.51 points, while the Nasdaq Composite gained 283.62 points, or 1.45%, to 19,914.59. The Dow Jones Industrial Average rose 510.19 points, or 1.20%, to 43,091.97.

Among the "magnificent seven" group of megacap stocks, Tesla underperformed.

Airline stocks gained altitude amid cooling Middle East tensions.

But defense stocks lost ground. Lockheed Martin (LMT) and RTX Corp (RTX) both closed lower.

Shares of crypto companies Coinbase Global (COIN) and MicroStrategy (MSTR) rose after bitcoin hit a one-week high.

Broadcom (AVGO) touched a record high after HSBC raised the semiconductor manufacturer to "buy" from "hold".

Package delivery firm FedEx (FDX) is expected to report quarterly results after the closing bell.

(Reporting by Stephen Culp; Additional reporting by Kanchana Chakravarty in Bengaluru; Editing by David Gregorio)