US stock markets closed modestly higher on Tuesday, with the S&P 500 gaining 0.13% and the Dow Jones increasing by 0.46%. This rise was fueled by enthusiasm surrounding artificial intelligence, particularly benefiting small-cap stocks and the semiconductor sector. Hewlett Packard Enterprise's announcement to accelerate its financial targets and Alphabet's plans to raise $80 billion for AI infrastructure contributed to this positive sentiment, although Alphabet's shares fell. The Nasdaq Composite remained largely unchanged. Meanwhile, geopolitical tensions, particularly regarding US-Iran negotiations and ongoing Israeli strikes in Lebanon, have raised concerns over inflation and the potential for the Federal Reserve to increase interest rates by year-end. A recent Labor Department report indicated an unexpected rise in job openings, driven by the professional services sector, but overall labor market activity showed signs of slowing down. Analysts are closely watching the upcoming May employment report, which is expected to show a deceleration in job growth.