The New York Stock Exchange closed with massive gains Tuesday amid the largest increases since May last year, carried by growing optimism that the Iran war may soon end.

The Dow Jones earned 2.49%, or 1,125.37 points, to close at 46,341.51.

The Nasdaq composite surged 3.83%, or 795.99 points, to 21,590.63, while the S&P 500 jumped 2.91%, or 184.8 points, to 6,528.52.

The Volatility Index (VIX), often referred to as the market’s “fear index,” fell by 17.51% to 25.25.

Markets reacted positively to reports suggesting that US President Donald Trump may be willing to end attacks on Iran, raising hopes of potential de-escalation in the war that has stretched across the region, while the closure of the Strait of Hormuz triggered global reverberations

Trump said Tuesday that he believes the Iran war would not last "much longer" and that the Strait of Hormuz would reopen "automatically" when the US leaves, according to a New York Post report.

Meanwhile, Iranian Foreign Minister Abbas Araghchi said Tuesday that Iran was not seeking a ceasefire but a complete end to the war across the region, stressing that any resolution must include guarantees against future attacks and compensation for damages.

Amid these developments, the price of Brent crude oil fell by 3.8% to $103.29 per barrel as of 2035 GMT.

Nvidia climbed by over 5.6% after announcing a $2 billion investment in Marvell Technology to connect the Santa Clara-based company to Nvidia’s AI factory and AI-RAN ecosystem through NVLink Fusion.

Despite rising 3.1% on Tuesday, Microsoft posted its worst quarterly performance in the first quarter since the 2008 financial crisis, dropping 23%.

On the data side, US house prices edged up 0.1% in January on a monthly basis, while annual gains remained modest.

The Conference Board's Consumer Confidence Index edged up by 0.8 points to 91.8 in March.

- European stocks

The stock markets in Europe also saw increases on Tuesday, with the benchmark Stoxx Europe 600 index rising 0.41% to close at 583.14 points.

Among major bourses, the UK’s FTSE 100 gained 0.48% to 10,176.45, Germany’s DAX 40 added 0.52% to 22,680.04, France’s CAC 40 climbed 0.57% to 7,816.94, and Italy’s FTSE MIB 30 advanced 1.11% to 44,309.71.