The S&P 500 gained 0.61% to 7,519.12 and the Nasdaq Composite rose 1.19% to 26,656.18, both reaching record closing highs on Tuesday. According to Reuters, the S&P 500 information technology subindex led gains with a rise of 1.7%, while six of the 11 main S&P sectors were in the green. The Philadelphia SE Semiconductor index hit an all-time high, gaining 5.5%, reflecting the strength of AI-driven demand across the technology sector. The Nasdaq recorded 185 new highs and 70 new lows, while the S&P 500 posted 42 new 52-week highs and one new low, underscoring the broad-based nature of the current rally. Volume on US exchanges was 18.85 billion shares, compared with the 18.71 billion average for the full session over the last 20 trading days.
The semiconductor sector has emerged as a standout performer, with semiconductors soaring 20.1% in a month. According to Reuters, Micron Technology Inc has joined the trillion-dollar club, gaining 19% and hitting $1 trillion in market value for the first time after UBS increased its price target on the stock to $1,625 from $535. Qualcomm rose almost 4.5% after Bloomberg News reported it reached a deal with TikTok owner ByteDance to supply chips, while Marvell Technology ended 6% higher. The rally reflects strong demand for semiconductor components supporting data center infrastructure buildouts, with memory chips becoming one of the hottest themes in semiconductors this year as supply constraints, AI server demand and rising high-bandwidth memory requirements continue reshaping the industry.
The situation in Iran continues to present market uncertainties, with President Donald Trump saying Monday that talks with Iran were "proceeding nicely," although he also warned the United States could move offensively if negotiations collapse. As reported by Reuters, U.S. Secretary of State Marco Rubio said that the deal with Tehran could "take a few days," while Iran's Tasnim news agency reported that Tehran was seeking the release of $24 billion of Iranian funds frozen overseas. The US military carried out what it described as "self defense" strikes in southern Iran" targeting missile launch sites and Iranian naval units attempting to place mines. While a complete agreement has been described as being "right around the corner," the Strait of Hormuz must be opened in June as oil supply fundamentals begin to deteriorate painfully by July. Secretary of State Mark Rubio has vowed that the strait would reopen "one way or another," though the current military actions have certainly dampened hopes for a lasting agreement.
The surge in AI stocks was fueled by growing optimism around long-term memory-chip demand tied to artificial intelligence infrastructure buildouts. Analysts at UBS recently argued the stock could more than double from current levels, citing the benefits of Micron's long-term supply agreements and tightening memory markets. Other memory-related names also rallied strongly, with Seagate Technology gaining roughly 3% and Western Digital jumping about 8%. The Roundhill Memory ETF climbed approximately 12%, reflecting the broader strength in memory-related investments. With the earnings season winding down, first-quarter earnings growth is expected to be 29% year-on-year compared with the 16.1% estimated a month ago, according to LSEG data from Friday. Upbeat earnings and renewed confidence in AI trade have driven U.S. equities higher despite the ongoing conflict with Iran, with investors now turning their attention to IPOs of some of the largest private AI companies, including SpaceX.
The bond market has reflected growing optimism as oil prices dropped 5-6 basis points across the yield curve from Friday's close, according to Investing.com India. Corporate credit spreads continue to fall on the strength of equity markets, though bets for a Federal Reserve rate cut remain slim. The current market setup shows encouraging signs with the even-weighted S&P 500 not far behind the market-weighted S&P 500, which would be beneficial given the record concentration of returns. With short interest in U.S. stocks at multi-year highs, the market remains positioned for further gains if the Iran situation is resolved with a workable solution. As reported by Reuters, Brent crude futures climbed about 4% on Tuesday after the US military carried out strikes in Iran, adding to uncertainty over whether a deal would be reached soon to end the war and open up shipping flows through the Strait of Hormuz. Advancing issues outnumbered decliners by a 2.47-to-1 ratio on the NYSE and 1.72-to-1 ratio on the Nasdaq, with 627 new highs and 90 new lows on the NYSE.
