What is the reason behind the rally in stocks and the decline of the dollar on Tuesday as Israel recovers and the Federal Reserve adopts a more cautious approach?

U.S. stocks saw a strong rally at midday in New York, reflecting the positive sentiment in Asian and European markets. The Israel Defense Forces have advanced into Palestinian territory after the Israeli government cut off supplies to Gaza. Benjamin Netanyahu’s government is trying to negotiate an emergency government to deal with the conflict. Israeli high-tech companies recorded gains, while Atlanta Fed President Raphael Bostic stated that further interest rate hikes may not be necessary. Solar-related stocks performed well, and all sectors of the S&P 500 posted gains. The S&P 500, Nasdaq 100, Dow Jones, and Russell 2000 all experienced positive performance on Tuesday. Various ETFs also rose, with the Materials Select Sector SPDR Fund and the Consumer Discretionary Select Sector SPDR Fund seeing the largest gains. Bank of America, Rivian Automotive, Lucid Group, NIO Inc., and PepsiCo all saw their stocks rise. Crude oil prices fell, treasury yields were mixed, the dollar weakened, and European equity indices rallied. Gold, silver, and Bitcoin saw slight declines.