The S&P 500 and the Nasdaq hit record highs on Wednesday, extending their strong run powered by sustained enthusiasm around artificial intelligence and the prospect of a US-Iran peace agreement.
The latest round of AI frenzy came after Advanced Micro Devices forecast second-quarter revenue above expectations, on robust demand for its data-centre chips.The rally has shown that the market “cannot escape the euphoria surrounding AI investment”, said Kevin Gordon, head of macro research and strategy at the Schwab Center for Financial Research.
“A more protracted war and further climb in gasoline prices make for stronger spending headwinds, but until there are clear signs of job loss, the economy remains distanced from a full-blown recession.”
The ADP National Employment Report on Wednesday showed US private-sector employment jumped by 109,000 jobs in April, the biggest increase since January 2025.Meanwhile, oil prices fell to a two-week low, with Brent crude futures slipping 6.6 per cent and dragging the S&P 500 energy index 3.0 per cent lower. Washington and Tehran were closing in on an agreement over a one-page memorandum to end the war, a Pakistani source said.
In its current form, the memorandum would declare an end to the conflict and the start of a 30-day period of negotiations on a detailed agreement to open the Strait of Hormuz, limit Iran’s nuclear programme and lift US sanctions, Axios reported.
The gains in equities reflect rising risk appetite among investors — if corporate earnings remain strong and hopes for a peace deal stay alive. However, others warned against unfettered optimism unless there were more concrete signs of progress.
“Wall Street continues to double down on its bet that the war in the Middle East will not re-escalate and disrupt the market’s earnings-driven surge to all-time highs,” said Kyle Rodda, senior financial market analyst at Capital[dot]com.
“There’s a high risk that if that wager is wrong, risk assets would move sharply in reverse. However, the signals sent from the United States appear to offer reassurance that it’s not interested in renewing hostilities.”
At 09:56am ET, the Dow Jones Industrial Average rose 450.72 points, or 0.91 per cent, to 49,744.78, the S&P 500 gained 57.64 points, or 0.79 per cent, to 7,316.86 and the Nasdaq Composite gained 256.35 points, or 1.01 per cent, to 25,582.48.
Eight of the 11 major S&P 500 sectors were in positive territory. The Philadelphia SE Semiconductor index rose 2.9 per cent and hit another record high.AMD jumped 16.7 per cent, while rival Intel rose 2.7 per cent. Super Micro soared 16.6 per cent following a stronger-than-expected forecast for fourth-quarter revenue and adjusted profit.
Alphabet surged 1.5 per cent, while Nvidia rose 4.0 per cent.Advancing issues outnumbered decliners by a 2.27-to-1 ratio on the NYSE and by a 1.54-to-1 ratio on the Nasdaq.The S&P 500 posted 36 new 52-week highs and 13 new lows while the Nasdaq Composite recorded 115 new highs and 50 new lows.
