Stocks climbed as investors reacted positively to Micron Technology Inc.'s earnings forecast and a significant slide in oil prices. The S&P 500 rose 0.6%, with approximately 350 of its constituent shares advancing. This rebound followed a recent market sell-off driven by concerns over the sustainability of AI spending and elevated valuations after a nearly three-month equity rally. Chipmakers, including Micron, stabilized, with the company's shares having soared almost 300% in 2026 due to high demand for AI infrastructure components.
The decline in energy prices further bolstered market sentiment, alleviating inflationary pressures. Brent crude sank below $75 per barrel, and West Texas Intermediate (WTI) fell 3.6% to $70.61 a barrel, reaching a 3.5-month low. This drop in oil prices also contributed to a fall in Treasury yields, with the 10-year T-note yield decreasing by 8 to 9 basis points to a 6-week low of 4.406%. Gold prices also fell 2.5% to $4,014.71 per ounce.
Strategists at JPMorgan Chase & Co., led by Dubravko Lakos-Bujas, anticipate a "blue sky" scenario for US stocks, citing solid earnings and a potential peace deal in the Iran war. They raised their year-end target for the S&P 500 to 7,800, from its current level near 7,400. Easing geopolitical tensions, particularly regarding the Strait of Hormuz, facilitated increased oil supplies, contributing to the price slide and reducing expectations for further interest rate hikes by the Federal Reserve. Traders now price in about 40 basis points of tightening, ebbing from earlier bets on two hikes by mid-2027.
Other market movements included the Nasdaq 100 rising 0.3% and the Dow Jones Industrial Average gaining 0.9%. The Bloomberg Dollar Spot Index increased by 0.2%, while the euro fell 0.2% to $1.1360, the British pound dropped 0.3% to $1.3170, and the Japanese yen decreased 0.1% to 161.74 per dollar. Sentiment was also improved by a rally in meme stocks, notably Wendy's Co., and positive developments like Congress passing the 21st Century Road to Housing Act, which boosted homebuilders and building suppliers.
