United States benchmark indices finished mixed on Tuesday (Wednesday AEST), with the S&P 500 and Nasdaq Composite closing at fresh record highs as investor enthusiasm around artificial intelligence and semiconductor demand outweighed lingering geopolitical concerns in the Middle East.
The Dow Jones Industrial Average fell 118.0 points, or 0.2%, to 50,461.7. The S&P 500 gained 45.7 points, or 0.6%, to 7,519.1, while the Nasdaq Composite advanced 312.2 points, or 1.2%, to 26,656.2.
Investor sentiment remained supported by strong gains across technology and semiconductor stocks despite ongoing uncertainty surrounding ceasefire negotiations between the United States and Iran.
United States President Donald Trump said in a Truth Social post on Monday that discussions aimed at ending the conflict were “proceeding nicely”, although he warned Washington could take further military action if negotiations failed.
Geopolitical tensions remained elevated after the United States confirmed it carried out what it described as “self-defence” strikes in southern Iran early Tuesday.
U.S. Central Command spokesman Tim Hawkins said targets included missile launch sites and Iranian boats attempting to deploy mines. Hawkins added that the United States had shown “restraint during the ongoing ceasefire” between the two countries.
Semiconductor stocks led Wall Street gains as investors continued to position around AI-related demand growth.
Micron Technology surged 19.3% after UBS raised its price target on the stock to US$1,625 from $535. The rally pushed the company’s market capitalisation above $1 trillion for the first time.
Other memory chip makers also advanced strongly, with Seagate Technology rising 4.1% and Western Digital climbing 8.3%.
Qualcomm gained 4.5% after Bloomberg News reported the company had reached an agreement with TikTok owner ByteDance to supply chips. Marvell Technology finished 6% higher.
Oil prices remained volatile following the latest military developments in the Middle East.
West Texas Intermediate crude futures for July delivery fell 2.81% to settle at $93.89 a barrel after paring earlier losses. Brent crude rose 3.58% to finish at $99.58 a barrel.
The recent pullback in oil prices has helped support equity markets over the past week. The S&P 500 climbed 0.9% last week to record its longest weekly winning streak since late 2023. The Dow Jones gained 2.1%, marking its third weekly rise in four weeks, while the Nasdaq added 0.5%, its seventh weekly gain in eight weeks.
However, elevated crude prices and persistent inflation pressures have reduced expectations that the Federal Reserve will ease monetary policy in the near term.
According to the CME Group FedWatch Tool, traders are now pricing in an 11.3% chance of a rate hike in July, compared with just 0.9% one month ago.
On the economic front, the Conference Board said its consumer confidence index slipped to 93.1 in May from an upwardly revised 93.8 in April. Economists had expected a reading of 92.0.
The labour market continued to provide support for consumer sentiment, while surveys from the University of Michigan remained more heavily influenced by elevated petrol prices.
On the bond markets, U.S. Treasury yields moved lower. The benchmark 10-year Treasury yield fell 1.4% to 4.491%, while the two-year Treasury yield declined 2.1% to 4.036%.
