In early U.S. trading on Wednesday, major stock indices displayed a split trajectory, with the Dow Jones Industrial Average reaching a fresh intraday record high, while the S&P 500 and Nasdaq Composite indices declined. Oil prices fell on hopes for a ceasefire between the U.S. and Iran.
The Dow Jones Industrial Average rose 165.11 points, or 0.33%, to 50,626.79. The Nasdaq Composite fell 48.85 points, or 0.18%, to 26,607.33. The S&P 500 index declined 6.81 points, or 0.09%, to 7,512.31.
The drop in oil prices provided some support to the broader market. Following a report from Iranian state television stating the country's commitment to restoring commercial traffic in the Strait of Hormuz to pre-war levels within a month, U.S. crude oil futures fell more than 3%, dropping below $91 per barrel.
However, the White House denied this 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 sharply the previous day following an optimistic report from UBS.
UBS analysts suggested the stock still has the potential to more than double as memory suppliers sign long-term agreements to facilitate the deployment of artificial intelligence. Investors are turning their focus 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 had propelled both the S&P 500 and the tech-heavy Nasdaq Composite to new intraday and closing highs in the prior session. The S&P 500 rose 0.61% on Tuesday, while the Nasdaq jumped 1.19%. The blue-chip Dow Jones Industrial Average 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 "defensive" U.S. strike in southern Iran early Tuesday, Central Command spokesman Tim Hawkins stated that the U.S. had exercised restraint during a "continuing pause in fighting" between the two nations.
Expectations for a de-escalation of tensions with Iran, coupled 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 stock market gains.
Speaking on CNBC Tuesday afternoon, he stated: "We have yields that are high, with the U.S. 10-year Treasury yield around 4.50%, inflation expectations that are moving higher, and a yield curve that has actually flattened so far this year. All of those things don't support a sustainably higher multiple from where we are today."
Pettit's year-end target for the S&P 500 is 7,700 points, implying only a modest 2% upside from current levels.
Goldman Sachs holds a different view. The firm raised its year-end target for the S&P 500 from 7,600 to 8,000 points late Tuesday, citing expectations for continued strong earnings growth even amid some geopolitical headwinds.
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