New York Stock Exchange Trader [AFP Yonhap News File Photo]

New York stocks closed slightly higher on Tuesday, buoyed by the artificial intelligence (AI) boom, amid renewed tensions in the Middle East after U.S. President Donald Trump stated that a ceasefire with Iran was hanging by a thread.

On Tuesday, the Dow Jones Industrial Average closed at 49,704.47, up 95.31 points (0.19%) from the previous trading day.

The S&P 500 index closed at 7,412.84, up 13.91 points (0.19%) from the previous trading day, and the tech-heavy Nasdaq Composite index closed at 26,274.13, up 27.05 points (0.10%) from the previous trading day.

This is the first time the S&P 500 index has closed above the 7,400 mark. The Nasdaq index also broke its previous all-time high record.

Earlier, when asked about the ceasefire situation with Iran, President Trump said, "It's incredibly weak, the weakest condition possible. It's hanging on by a thread and the doctor is coming in and saying there's a 1% chance."

He also stated in a Fox News interview that he was considering resuming the halted 'Operation Freedom' project.

Amid renewed Middle East tensions, Brent crude futures closed at $104.21 a barrel, up 2.9% from the previous trading day, and U.S. West Texas Intermediate (WTI) crude futures closed at $98.07 a barrel, up 2.8%.

Despite the possibility of renewed U.S. attacks on Iran and rising oil prices, investors maintained optimism fueled by the ongoing AI boom.

In a note to investors on Monday, Ed Yardeni, chief investment strategist at Yardeni Research, raised his year-end target for the S&P 500 index from 7,700 to 8,250.

Yardeni explained the upward revision by stating, "I have never seen upward revisions in earnings expectations happen as rapidly as they have in recent months," adding, "As a result, we are seeing a profit-led rally in the stock market."

Semiconductor stocks supported the market on Tuesday.

Qualcomm surged 8.42%, and memory chip stocks such as Micron Technology (6.5%), Western Digital (7.46%), and Seagate (6.56%) continued their strong upward trend from the previous week.

However, among the Magnificent Seven (M7), Nvidia (1.97%) and Tesla (3.89%) rose, while the other five stocks—Alphabet, Amazon, Apple, Meta, and Microsoft—declined.

Ross Mayfield, an investment strategist at Baird, told Reuters, "The semiconductor and AI infrastructure sectors have taken on a life of their own. The chasing momentum into these stocks is so strong that it seems like they are moving regardless of any news headlines."