U.S. stocks continued to advance late Wednesday, with the Dow Jones Industrial Average rising 240 points. Oil prices fell amid hopes for a U.S.-Iran ceasefire.
The Dow increased by 241.11 points, or 0.48%, to close at 50,702.79. The Nasdaq Composite added 23.74 points, or 0.09%, ending at 26,679.92. The S&P 500 rose 7.35 points, or 0.10%, to finish at 7,526.47.
The drop in oil prices provided some support to the market. U.S. crude futures fell over 3% to below $91 per barrel following a report from Iran's state television that the country committed to restoring commercial traffic in the Strait of Hormuz to pre-war levels within a month.
However, the White House denied the report from Iranian state media, calling it "completely fabricated."
Micron Technology, which surged 19% on Tuesday to surpass a $1 trillion market capitalization for the first time, gained less than 1% on Wednesday. The stock had rallied the previous day following an optimistic report from UBS.
UBS believes the stock still has more than double its upside potential as memory suppliers sign long-term agreements to advance artificial intelligence adoption. Investors are turning to memory chip manufacturers as a preferred way to participate in the AI bull market. Micron's South Korean peer, SK Hynix, also reached a $1 trillion market capitalization overnight.
Gains in the technology sector propelled the broader market and the tech-heavy Nasdaq Composite to new intraday and closing highs in the previous session. The S&P 500 rose 0.61% on Tuesday, while the Nasdaq jumped 1.19%. The blue-chip Dow Jones Industrial Average, however, fell 118.02 points, or 0.23%.
Investors were also encouraged by comments from U.S. President Donald Trump, who stated that negotiations to end the war with Iran were "progressing well." Despite a "self-defense" strike by the U.S. in southern Iran early Tuesday morning, Central Command spokesperson Tim Hawkins said the U.S. exercised restraint during an "ongoing ceasefire period" between the two countries.
Expectations of easing tensions with Iran, combined with a strong earnings season, have driven the stock market to record highs this month. However, Drew Pettit, U.S. equity strategist at Citigroup, believes there is limited room for further gains.
In a Tuesday afternoon interview on CNBC, he stated, "Yields are high right now, with the U.S. 10-year Treasury yield around 4.50%, inflation expectations are rising, and the yield curve has actually flattened this year. All these factors do not support sustainably higher valuation multiples at present."
Pettit's year-end target for the S&P 500 is 7,700 points, implying only a modest 2% upside for the index.
Goldman Sachs holds a different view. The firm late Tuesday raised its year-end target for the S&P 500 from 7,600 to 8,000 points, citing expectations for continued strong earnings growth despite some geopolitical headwinds.
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