Key insights
- US equity markets, including the S&P 500, Nasdaq, and Dow Jones, closed at record highs, indicating continued bullish sentiment. However, the market showed signs of rotation, with consumer-focused sectors gaining while energy and financials declined. Investors are digesting recent strong gains and looking for new catalysts beyond earnings season. The surge in demand for AI is boosting chip stocks like Micron, which reached a $1 trillion market cap, suggesting underlying strength in technology despite broader market consolidation.
Investing.com -- Wall Street on Wednesday ended a smidge higher after making small moves on both sides of the flatline through the session. A gain in consumer focused sectors was offset by a fall in energy and financial stocks. Investors also weighed ongoing uncertainty in peace talks to end the war in Iran.
The benchmark S&P 500 index closed little changed at 7,520.45 points, the tech-heavy NASDAQ Composite added 0.1% to settle at 26,674.74 points, and the blue-chip Dow Jones Industrial Average rose 0.4% to 50,644.41 points. All three averages notched record closes.
"After a strong run, with the S&P 500 up about 18% and tech up 38% from the March 30 lows, it’s not surprising to see the market pause here and digest those gains," Keith Lerner, chief investment officer and chief market strategist at Truist, told Investing.com.
"Under the surface, the more interesting story is rotation, as lower oil prices are helping some of the lagging areas, like consumer discretionary and staples, play a bit of catch-up," he said.
"Stepping back, the bigger picture hasn’t changed, the trend is still up, but after such a sharp move, we’d expect a bumpier path from here. We are now moving past earnings season, which has been a key driver of the market’s upside, and the focus shifts to what the next catalyst will be," Lerner added.
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The S&P and Nasdaq notched fresh record closes on Tuesday to kick off the holiday-shortened week, helped largely by the S&P 500 technology sector posting a four-day win streak. Chip stocks were among the biggest gainers within the sector, in particular memory chipmaker Micron Technology.
With demand for artificial intelligence processes soaring and requiring more computing power, the need for high-powered memory chips has been significantly boosted even amid a persistent supply glut. Against this backdrop, Micron stock on Tuesday powered to a $1 trillion market capitalization for the first time ever, joining South Korea’s Samsung Electronics. Another major semiconductor name from the Asian nation, SK Hynix, also joined the $1 trillion club on Wednesday.
“The strong trading outlook today is hard to dispute, as artificial intelligence’s need for computing power and inference capability drives voracious demand for memory. But the share price chart looks awfully similar to that of 1999-2000, just as the technology, media and telecoms bubble enjoyed a final blow-off surge before it burst," Russ Mould, investment director at AJ Bell, said.
"The good news is that analysts think Micron’s profit momentum will be maintained. The Idaho-headquartered company is expected to rack up record sales and after-tax profits in each of its financial years to August 2026 and 2027," he said.
“That helps to explain investors’ enthusiasm for the shares, and, as a rule, semiconductor companies are momentum stocks extraordinaire," Mould added.
Micron was poised to extend its rally from the previous session after opening with solid gains on Wednesday. However, soon after, the stock began to seesaw, as overall momentum in the tech rally cooled. Shares of Micron eventually ended 3.6% higher.
Turning to developments in the Middle East, media reports from several outlets including Reuters and Fox News said Iran had obtained a draft of an initial, unofficial structure for a memorandum of understanding (MoU) that would end hostilities with the U.S., citing Iranian state TV.
As per the details of the MoU, Iran would restore commercial shipping through the critical Strait of Hormuz to pre-conflict levels within a month, while the U.S. would lift its naval blockade of Iran’s ports and coastline and would withdraw all military forces from the country’s vicinity.
However, the White House pushed back against the reports. Its official Rapid Response 47 account said: "This report from Iranian controlled media is not true and the MOU they ’released’ is a complete fabrication. Nobody should believe what Iranian state media is putting out. FACTS MATTER."
President Donald Trump had earlier on the weekend said an MoU had been "largely negotiated" after a call with regional leaders, boosting hopes for an imminent end to the conflict. But those hopes were dented on Tuesday after the U.S. military said it had carried out "defensive" strikes on Iran and Tehran said it had retaliated. Al Jazeera reported that indirect negotiations between the parties have continued, despite the fresh exchange of fire.
"They want very much to make a deal. So far, they haven’t gotten there. We’re not satisfied with it, but we will be — either that or we’ll have to just finish the job... They’re negotiating on fumes, but we’ll see what happens," Trump said at a cabinet meeting on Wednesday.
"Diplomacy is always the first option and we continue to work on that...There’s an agreement to be made, we want that to be made, I think there’s been some progress and some interest and we’ll see over the next few hours and days whether progress could be made," U.S. Secretary of State Marco Rubio said at the meeting.
When asked what were the current state of talks with Iran, Trump said "we’re doing very well."
"They’re starting to give us the things that they have to give us — and if they do, that’s great, and if they won’t, then the man on my left is going to finish them off," the president said, referring to U.S. Secretary of War Pete Hegseth.
"We can make a good deal right now, but maybe not a great deal — and if it’s not a great deal, we’re not making it," Trump added.
Oil prices pared some losses after the White House rejection of the Iranian reports, but remained well within negative territory on hopes that normal tanker traffic through the Strait of Hormuz would resume soon. Scores of vessels have already transited the strait this week under Iranian navy supervision, according to state media.
Brent crude futures expiring in July, the global oil benchmark, were last down 4.6% to $95.00 a barrel, below recent peaks above $100 a barrel, but well above pre-war levels. The effective shuttering of the strait, a vital waterway through which a fifth of the world’s oil and gas flows, has led to the biggest supply disruption in history. Surging oil prices have led to an inflationary shock across the globe, driving traders to raise their expectations for central bank interest rate hikes.
Looking at Wednesday’s active stocks, there were some notable earnings-related moves.
U.S.-listed shares of China’s PDD Holdings, the parent company of popular online retailer Pinduoduo, dropped 10.4% after reporting quarterly revenue that missed estimates.
Abercrombie & Fitch advanced 9%, after the apparel retailer beat quarterly profit expectations despite flagging some weakness in its Europe, the Middle East, and Africa segment due to the Iran war.
The earnings calendar is fairly busy after the closing bell, with quarterly reports from semiconductor major Marvell, Dow 30 component Salesforce, and personal computer and printer maker HP.
Ayushman Ojha and Scott Kanowsky contributed to this article
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