Wall Street Reaches New Highs as Micron Joins the $1 Trillion Club
Wall Street traded mostly higher on Tuesday, supported by a strong rally in semiconductor stocks led by Micron Technology, while investor sentiment also improved following signs of potential diplomatic progress between the United States and Iran. However, renewed military tensions later created uncertainty around those negotiations.
Markets reopened after the Memorial Day holiday weekend, with investors returning to a mix of strong technology performance, geopolitical developments and renewed focus on inflation risks.
S&P 500 and Nasdaq Hit New Records
The S&P 500 gained 0.5%, reaching 7,511 points, after earlier touching a fresh intraday all-time high.
Meanwhile, the Nasdaq Composite climbed 0.9%, driven largely by continued momentum in artificial intelligence and semiconductor stocks.
The Dow Jones Industrial Average underperformed, slipping 0.2%, weighed down by declines in major components including Chevron and UnitedHealth.
U.S.-Iran Developments Continue to Influence Market Sentiment
Optimism surrounding a potential U.S.-Iran peace agreement increased after President Donald Trump stated that negotiations had largely progressed following discussions with regional leaders.
However, sentiment weakened after the U.S. military confirmed defensive strikes in southern Iran, targeting vessels allegedly attempting to place mines in the Strait of Hormuz.
Reports indicated that Iranian forces responded, while additional U.S. strikes later targeted missile launch sites. The developments renewed concerns that diplomatic progress could remain fragile.
Marco Rubio, U.S. Secretary of State, said discussions may require several more days but maintained that the Strait of Hormuz would eventually reopen.
Oil Prices Rebound as Ceasefire Optimism Weakens
Brent crude oil rose more than 4% to $97.42 per barrel, recovering after earlier weakness.
Although oil prices recently moved below $100 per barrel, they remain significantly above levels seen before the conflict intensified.
At the same time, the U.S. dollar strengthened slightly, while gold prices moved lower, reflecting changing risk sentiment across markets.
Bond Markets Prepare for Key U.S. Inflation Data
Investor attention also shifted toward the bond market, which has experienced heightened volatility due to expectations that central banks may keep interest rates elevated to combat inflation pressures linked to rising energy costs.
U.S. Treasury yields declined on Tuesday, with the benchmark yield falling to approximately 4.5%. Markets are now preparing for the upcoming release of the core Personal Consumption Expenditures (PCE) index, widely viewed as the Federal Reserve’s preferred inflation measure.
Analysts have also pointed to increasing U.S. government debt and higher Treasury issuance as factors contributing to long-term pressure on bond markets.
Consumer Confidence Weakens as Inflation Concerns Return
New data from The Conference Board showed that U.S. consumer confidence slipped to 93.1 in May, down slightly from 93.8 in April.
According to market analysts, higher energy prices have renewed inflation concerns among households, although longer-term inflation expectations remained relatively stable.
Micron Surges as UBS Raises Price Target Sharply
Among individual stocks, Micron Technology led gains in the semiconductor sector, rising more than 16% after UBS significantly increased its price target.
The bank lifted its target to $1,625, implying potential upside of more than 100% from previous closing levels.
The rally helped Micron surpass a $1 trillion market capitalization for the first time in company history, joining an elite group of major technology firms.
AI Boom Continues to Support Chip Stocks
The ongoing surge in artificial intelligence investments has continued to drive strong performance across semiconductor companies.
The Philadelphia Semiconductor Index, often viewed as a key benchmark for chip stocks, reached a new record high. The index previously recorded its longest winning streak ever earlier this year.
The strength in AI-related companies has helped Wall Street maintain upward momentum despite persistent geopolitical tensions and inflation concerns.
