The S&P 500 and Nasdaq surged to record high closes on Wednesday, with the S&P 500 gaining 57.64 points (0.79%) to 7,316.86 points and the Nasdaq Composite climbing 256.35 points (1.01%) to 25,582.48, according to The Economic Times. The Dow Jones Industrial Average also participated in the rally, rising 450.72 points (0.91%) to 49,744.78. During trading, eight of the 11 major sectors within the S&P 500 posted gains, with the Philadelphia Semiconductor Index rising 2.9% to a new all-time high. This surge was driven by sustained enthusiasm around artificial intelligence and the prospect of a U.S.-Iran peace agreement, extending the strong run that has characterized recent trading sessions.
Advanced Micro Devices shares jumped by 16.7% after forecasting second-quarter revenue above expectations on robust demand for its data center chips, as reported by The Economic Times. The company's strong performance sparked a broader rally in chipmakers and AI-related stocks, with Intel gaining 2.7% and Super Micro Computer rising 16.6% after strong fourth-quarter revenue and earnings forecasts. Alphabet shares rose 1.5% while Nvidia jumped 4%. The latest round of AI frenzy came after Advanced Micro Devices delivered strong quarterly results, reinforcing investor confidence in the artificial intelligence sector's growth trajectory. Advancing stocks outnumbered decliners by a ratio of 2.27 to 1 on the New York Stock Exchange, with the S&P 500 recording 36 new 52-week highs against 13 new lows.
Global stocks surged and oil prices slumped after Iran said it was reviewing a new U.S. proposal, with sources indicating that Washington and Tehran were closing in on a one-page memorandum to end the war, according to The Economic Times. Brent crude futures fell about 6.6% to their lowest levels in two weeks, helping ease concerns about inflationary pressures. According to a report published by Axios, the memorandum would stipulate ending the conflict and beginning a 30-day negotiation period to reach a detailed agreement that includes reopening the Strait of Hormuz, limiting Iran's nuclear program, and lifting US sanctions. A Pakistani source reported that Washington and Tehran are nearing an agreement on this framework, providing additional support to market sentiment beyond the strong earnings performance from AI companies.
S&P 500 companies are on track for their strongest profit growth in more than four years, with over 80% of S&P 500 companies that reported through May 1 exceeding analysts' profit estimates, according to The Economic Times. The ADP National Employment Report showed that US private sector employment increased by 109,000 jobs in April, marking the largest increase since January 2025. Kevin Gordon, head of macroeconomic and strategy research at Schwab Center for Financial Research, noted that 'The market cannot escape the state of euphoria surrounding investment in artificial intelligence.' He added that a prolonged war and higher gasoline prices could pressure spending, but in the absence of clear signs of job losses, the economy remains far from entering a full recession. Walt Disney rose after beating second-quarter estimates and Uber Technologies gained after forecasting strong second-quarter bookings.
According to The Economic Times, St. Louis Federal Reserve President Alberto Musalem said the risks to monetary policy have shifted toward higher inflation, possibly requiring interest rates to stay on hold for some time amid a seemingly stable job market. Thomas Martin, senior portfolio manager at Globalt Investments, noted that 'The economy is chugging along just fine. There's no real danger signs of something that's even close to approaching a downturn.' Investors are awaiting the non-farm payrolls report on Friday, with U.S. jobs expected to increase by 62,000 in April after rebounding 178,000 in March. However, analysts warned against excessive optimism in the absence of clearer signals of actual progress, as noted by Kyle Rodda, senior financial market analyst at Capital.com, who cautioned that 'There is a significant risk that if this bet proves wrong, high-risk assets could face a sharp reversal.'
