NEW YORK, May 26 – Major stock indices reached unprecedented closing levels on Tuesday, driven by enthusiasm surrounding artificial intelligence technology that helped overcome concerns about ongoing Middle East diplomatic efforts and recent military actions involving Iran.
Technology companies focused on semiconductors powered the market gains, with Micron experiencing a remarkable 19% surge that pushed the company’s market capitalization to $1 trillion for the first time. This milestone came after UBS analysts raised their price target for the stock from $535 to $1,625.
Strong corporate earnings reports and renewed investor confidence in artificial intelligence investments have propelled equity markets upward despite international tensions with Iran. Market participants are now focusing on potential public offerings from major private AI companies, including SpaceX.
“For those of us that have been working that long, the tech rallies we’ve been seeing this year are reminiscent of the boom at the end of the 1990s,” said Chris Zaccarelli, chief investment officer for Northlight Asset Management.
“It’s also possible that some of the lessons that were learned after the tech bubble burst over 25 years ago will prevent the same thing from happening again.”
Investors found reassurance in statements from U.S. Secretary of State Marco Rubio, who indicated that reaching an agreement with Tehran to end hostilities could “take a few days.” Meanwhile, Iran’s Tasnim news agency reported that Tehran is pursuing the release of $24 billion in frozen Iranian assets held overseas.
“Even though we don’t have an end of the war yet, there’s a very high likelihood the situation will resolve itself in a peaceful fashion sooner rather than later,” said Adam Sarhan, chief executive of 50 Park Investments.
“But the reality is that earnings are expected to grow even with high inflation. The economy is still growing, and the market is a mirror of the economy to a large extent.”
The Dow Jones Industrial Average dropped 118.02 points, or 0.23%, closing at 50,461.68. The S&P 500 climbed 45.65 points, or 0.61%, finishing at 7,519.12, while the Nasdaq Composite jumped 312.21 points, or 1.19%, to end at 26,656.18.
All three major indices – the S&P 500, Nasdaq, and Russell 2000 – achieved intraday record highs during Tuesday’s session, highlighting the momentum behind the current market advance.
Oil prices surged approximately 4% following U.S. military operations in Iran, creating additional uncertainty about prospects for a swift resolution to the conflict and potential impacts on shipping through the Strait of Hormuz.
Qualcomm shares climbed nearly 4.5% after reports emerged that the company secured a chip supply agreement with ByteDance, TikTok’s parent company. Marvell Technology finished 6% higher, while the Philadelphia SE Semiconductor Index achieved a new all-time high with a 5.5% gain.
As the current earnings season nears completion, first-quarter profit growth is projected at 29% compared to the same period last year, significantly higher than the 16.1% estimate from a month earlier, according to LSEG data released Friday.
On the New York Stock Exchange, advancing stocks outnumbered declining ones by a 2.47-to-1 margin. The exchange recorded 627 new highs against 90 new lows.
Nasdaq trading showed 3,078 stocks rising while 1,785 declined, with advancing issues leading by a 1.72-to-1 ratio.
The S&P 500 registered 42 new 52-week highs and one new low, while the Nasdaq Composite logged 185 new highs and 70 new lows.
Trading volume across U.S. exchanges totaled 18.85 billion shares, compared to the 18.71 billion average over the past 20 trading sessions.
