The Nasdaq Composite closed higher, gaining 184.67 points (0.70%) to end at 26,089.45 as technology stocks led a rebound from the previous session's retreat. The retreat came after the tech-heavy index had gained 1.2% to close at 26,402.34 in previous sessions, hitting fresh intraday and closing records. The S&P 500 rose 0.6% to a new all-time high of 7,444.25, while the Dow Jones Industrial Average shed 67 points, or 0.1%, ending at 49,693.20. According to CNBC, roughly two-thirds of the S&P 500 were lower during the session, with home improvement retailer Home Depot and other cyclical stocks declining. Technology stocks, which had significantly outperformed the broader market, faced significant pressure as inflation fears spurred by higher energy prices due to the Iran war weighed on investor sentiment, but managed to rebound strongly in the latest session.
Micron Technology surged 4.8% and On Semiconductor jumped 11.1% as technology stocks led the market recovery following their recent pullback. The semiconductor sector had faced pressure after momentum suddenly halted for stocks riding excitement around artificial-intelligence technology, but the latest gains demonstrate the sector's resilience. Nvidia rose 2.3% and emerged as the strongest force pushing upward on the S&P 500 due to its immense size, with the chip company's CEO Jensen Huang receiving an invitation to join President Donald Trump on his trip to China to discuss allowing shipments of Nvidia AI chips to the world's second-largest economy. The VanEck Semiconductor ETF (SMH) had advanced 2% in previous sessions, continuing the strong performance from earlier sessions. A strong outlook by Cisco Systems Inc. had reinforced the bullish narrative for the technology sector, with the company's shares surging 20% in extended trading after issuing stronger-than-expected quarterly guidance and announcing 4,000 job cuts to redirect spending towards AI and networking investments.
The gains in equities masked underlying concerns about inflation that have driven bets the Federal Reserve will raise interest rates next year. April producer prices rose 1.4% from the previous month, marking the biggest jump since March 2022 and topping expectations of a 0.5% rise, with annual wholesale inflation rising to 6%. The benchmark 10-year U.S. Treasury yield hovered near its highest level since July, with economist Peter Schiff warning that "The yield on the 10-year Treasury is knocking at the door of 4.5%," adding that once it breaks above the threshold, yields could climb rapidly toward 5%. The inflation concerns were particularly pronounced due to higher energy prices from the Iran war, creating a headwind for other sectors while technology stocks remained resilient. The latest pullback reflects investor caution as markets digest the mounting price pressures and geopolitical tensions.
The gains in equities were supported by positive Asian market performance, with MSCI's broadest index of Asia-Pacific shares outside Japan rising 0.4%. According to NDTV, South Korea led the regional gains with a 1.7% increase, indicating broad-based optimism across Asian markets. Chinese equities, at their highest level since 2021, were set for a 1% advance, with attention on the summit between President Donald Trump and Xi Jinping in Beijing. The offshore yuan is on its best winning streak since 2017, reflecting positive regional sentiment. Japanese markets opened strongly while Australian equities traded lower, with investors monitoring Trump's upcoming meeting with Xi Jinping for potential developments on trade relations and semiconductor exports. As of latest reports, S&P 500 futures rose 0.2% as of 2:57 p.m. Tokyo time, while Nikkei 225 futures fell 0.7% and Japan's Topix declined 1%.
In corporate news, Cisco Systems Inc. raised $5.55 billion in its US initial public offering as the artificial intelligence chipmaker seizes on surging semiconductor demand. Intuitive Machines (LUNR) shares jumped 11% on Wednesday and extended gains after-hours on its selection for the U.S. Space Force's Andromeda contract ahead of quarterly earnings due premarket on Thursday. Ondas Holdings (ONDS) shares gained 3% in after-hours trading ahead of quarterly results after World View CEO Ryan Hartman highlighted SkyWeaver, the company's AI mission autonomy platform jointly developed with Palantir. Nvidia (NVDA) shares added 1% in after-hours trading as investors monitored Jensen Huang's China visit alongside Trump, even after short seller Culper Research warned that Nvidia faces a "significant China problem" from tightening Beijing restrictions. Ford Motor Co. jumped after Morgan Stanley issued a bullish call that the automaker's energy storage business could soon make a deal with hyperscalers. Nokia (NOK) shares logged their best session in over six months after Nokia appointed Siemens executive Emma Falck as the president of mobile infrastructure, boosting optimism around the company's 5G and 6G network strategy.
