All three major U.S. indexes hit record highs as falling oil supports sentiment
At around 2 a.m. Beijing time on May 28, U.S. stocks closed higher on Wednesday, with all three major indexes hitting record highs. Micron Technology extended its strong performance, while oil prices fell on hopes of a U.S.-Iran ceasefire.
The Dow rose 182.60 points, or 0.36%, to 50,644.28; the Nasdaq rose 18.55 points, or 0.07%, to 26,674.73; and the S&P 500 rose 1.24 points, or 0.02%, to 7,520.36.
The drop in oil prices supported the market. According to reports, Iranian state television said the country had pledged to restore commercial shipping through the Strait of Hormuz to prewar levels within a month, after which U.S. crude futures fell more than 5% to around $88 a barrel.
However, the White House denied the Iranian state media report, calling it “completely fabricated.”
Micron Technology closed up 3.6% on Wednesday. The stock had jumped 19% the day before after a bullish report from UBS, pushing its market value above $1 trillion for the first time.
UBS said the stock still has more than double the upside as memory suppliers sign long-term agreements to support AI deployment. Investors have turned to memory-chip makers as the preferred way to participate in the AI bull market. Micron’s Korean peer SK Hynix also reached a $1 trillion market cap overnight.
Tech-sector gains pushed the broader market and the tech-heavy Nasdaq to fresh 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 President Trump, who said talks to end the war with Iran were “going well.” Although the U.S. carried out “self-defense” strikes in southern Iran early Tuesday, Central Command spokesperson Tim Hawkins said the U.S. had shown restraint during the “ongoing ceasefire” between the two countries.
Expectations of easing tensions with Iran, along with a strong earnings season, have driven stocks to records this month. But Citi U.S. equity strategist Drew Pettit thinks there is limited room for further gains.
“Right now yields are elevated, the U.S. 10-year Treasury yield is around 4.50%, inflation expectations are also rising, and the yield curve has actually flattened this year,” he said on CNBC on Tuesday afternoon. “None of that supports a sustainable higher valuation multiple at current levels.”
Pettit’s year-end target for the S&P 500 is 7,700, implying only a modest 2% upside.
Goldman Sachs sees it differently. The bank raised its year-end S&P 500 target from 7,600 to 8,000 late Tuesday, saying earnings growth should remain strong even with some geopolitical headwinds.
