04:39 PM EDT, 03/17/2026 (MT Newswires) -- US equities notched back-to-back gains on Tuesday as the Federal Reserve's two-day monetary policy meeting began, while sentiment remained on shaky ground as the Iran war dragged on.

The Nasdaq Composite closed 0.5% higher at 22,479.5, while the S&P 500 gained 0.3% to settle at 6,716.1. The Dow Jones Industrial Average ticked up 0.1% to 46,993.3. Most sectors were in the green, led by energy and consumer discretionary, while health care saw the biggest drop.

Markets widely expect the Fed to leave its benchmark lending rate unchanged Wednesday, according to the CME FedWatch tool.

With a surprise move unlikely, Macquarie Group said the focus will be on the Fed's economic projections that include the so-called "dot plot." Markets would also be tracking any changes to the policy statement's language and Chair Jerome Powell's post-meeting remarks.

The "dot plot" may signal no interest rate cut this year amid inflationary pressures that are likely to intensify due to the ongoing US-Israel war with Iran, Macquarie Group said in a note e-mailed Tuesday.

Crude prices have surged more than 40% since the war broke out as the crucial Strait of Hormuz remained effectively closed, disrupting supplies.

"Already in December, (seven) of 18 participants had submitted projections with either no change in rate or a hike," Macquarie wrote. "Should (three) more participants move to this view, it would remove the projected cut for 2026."

Stifel Chief Economist Lindsey Piegza said the recent spike in energy prices could push some "dots higher."

West Texas Intermediate crude oil was up 2.9% at $96.18 a barrel in Tuesday late-afternoon trade following reports that Iran launched fresh attacks on the United Arab Emirates' energy infrastructure.

Israel said it killed Iran's security chief, Ali Larijani, as well as the commander of Tehran's Basij paramilitary force, CNN reported.

Most NATO allies of the US have informed Washington that they "don't want to get involved" in the Iran war, President Donald Trump said.

Separately, Joe Kent said he is resigning as director of the National Counterterrorism Center, saying Iran posed no imminent threat to the US.

US Treasury yields were lower, with the 10-year rate last down 1.9 basis points at 4.21% and the two-year rate little changed at 3.68%.

In economic news, US pending home sales unexpectedly rose last month amid improved affordability conditions, data from the National Association of Realtors showed.

"Those conditions could reverse if higher oil prices lead to an uptick in mortgage rates," NAR Chief Economist Lawrence Yun said.

In company news, Elbit Systems' ( ESLT ) fourth-quarter results rose year over year, while the Israeli defense electronics company said demand for its products has increased amid ongoing conflicts in the Middle East. The company's US-listed shares surged 16%.

Delta Air Lines ( DAL ) , American Airlines ( AAL ) and JetBlue Airways ( JBLU ) raised their first-quarter revenue expectations, citing strong demand trends even as the airline industry grapples with high jet fuel prices. Delta Air shares jumped 6.6%, while American Airlines ( AAL ) rose 3.5%. JetBlue ( JBLU ) fell 1.2%.

Eli Lilly ( LLY ) shares slumped 5.9%, the second worst performer on the S&P 500, as HSBC downgraded the drugmaker's stock rating and cut its price target to $850 from $1,070.

Academy Sports and Outdoors ( ASO ) guided for 2026 revenue and earnings below Wall Street's expectations as pressure on discretionary spending is expected to persist this year. The sporting goods retailer's shares plunged nearly 12%.

Gold was last up 0.1% at $5,005.90 per troy ounce, while silver dropped 1.7% to $79.31 per ounce.