- S&P 500, Nasdaq hit record highs on AI enthusiasm.
- AMD’s strong chip demand forecast fueled tech stocks’ surge.
- Hopes for US-Iran peace deal boosted investor sentiment.
The S&P 500 and Nasdaq touched fresh record highs on Wednesday, extending their rally as sustained enthusiasm around artificial intelligence and optimism over a potential US-Iran peace agreement lifted investor sentiment.
The latest wave of AI-driven gains followed stronger-than-expected guidance from AMD, which forecast second-quarter revenue above market expectations on the back of robust demand for its data-centre chips.
AI Rally Drives Market Momentum
“The market cannot escape the euphoria surrounding AI investment,” said Kevin Gordon, head of macro research and strategy at the Schwab Center for Financial Research.
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AMD surged 16.7 per cent after its forecast, while rival Intel rose 2.7 per cent. Super Micro jumped 16.6 per cent after issuing a stronger-than-expected fourth-quarter revenue and adjusted profit forecast.
Among other major tech names, Alphabet gained 1.5 per cent and Nvidia climbed 4 per cent. The Philadelphia SE Semiconductor Index rose 2.9 per cent to hit another record high.
Peace Deal Hopes Weigh On Oil
Investor sentiment was also buoyed by reports that Washington and Tehran were nearing a one-page memorandum aimed at ending the war in the Gulf.
According to Axios, the memorandum would formally end the conflict and begin a 30-day negotiation period on reopening the Strait of Hormuz, limiting Iran’s nuclear programme and lifting US sanctions.
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Oil prices fell sharply on the development, with Brent crude dropping 6.6 per cent to a two-week low, dragging the S&P 500 energy index down 3 per cent.
Analysts Warn Against Excessive Optimism
“Wall Street continues to double down on its bet that the war in the Middle East will not re-escalate and disrupt the market’s earnings-driven surge to all-time highs,” said Kyle Rodda, senior financial market analyst at Capital.com.
“There’s a high risk that if that wager is wrong, risk assets would move sharply in reverse. However, the signals sent from the United States appear to offer reassurance that it’s not interested in renewing hostilities.”
Jobs Data Supports Economic Outlook
Separately, the ADP National Employment Report showed US private-sector employment rose by 109,000 jobs in April, marking the biggest increase since January 2025.
“A more protracted war and further climb in gasoline prices make for stronger spending headwinds, but until there are clear signs of job loss, the economy remains distanced from a full-blown recession,” Gordon added.
Major Index Performance
At 09:56 AM ET, the Dow Jones Industrial Average rose 450.72 points, or 0.91 per cent, to 49,744.78, the S&P 500 gained 57.64 points, or 0.79 per cent, to 7,316.86, and the Nasdaq Composite advanced 256.35 points, or 1.01 per cent, to 25,582.48.
Advancing stocks outnumbered decliners by 2.27-to-1 on the NYSE and 1.54-to-1 on the Nasdaq. The S&P 500 recorded 36 new 52-week highs, while the Nasdaq posted 115 new highs.
