The S&P and Nasdaq logged fresh record highs on Wednesday, buoyed by reports that the U.S. and Iran were nearing a deal to conclude their more than two-month old conflict.
Chipmaking stocks were also buoyed by strong returns from Advanced Micro Devices, which indicated that an ongoing boom in enthusiasm around artificial intelligence remains in place. AI server maker Super Micro Computer was another notable outperformer, with its shares soaring by more than 24% on an upbeat quarterly revenue outlook.
"A touch of AI-mania has returned as a theme," Kyle Rodda, senior financial market analyst at Capital.com, said. "It’s not without fundamental justification, with S&P 500 earnings growth nearing 30% for this quarter, led by the big tech names. There are bubbling concerns about concentration risk. However, valuations aren’t as stretched as they were last year, implying the market isn’t quite at irrational exuberance levels yet."
Iran war peace hopes
Washington and Tehran have reportedly been working with mediators on a one-page framework to once again restart talks over a lasting peace deal. The discussions are seen kicking off next week in Pakistan, according to the Wall Street Journal.
The paper added that a monthlong process would then look to resolve disputes over Iran’s nuclear ambitions and relief from sanctions, however key disagreements remain over areas like nuclear enrichment and inspections.
President Donald Trump suggested in remarks at the White House on Wednesday afternoon that the U.S. had "won" the war and that talks with Tehran had been "very good" over the last 24 hours.
Earlier in the day, Trump said in a social media post that the U.S. operation against Iran, which it launched jointly with Israel in late February, would be over if Tehran "agrees to give what has been agreed to," although he did not elaborate further. He also threatened to carry out renewed attacks should an accord not be reached.
Iran, meanwhile, has provided more mixed messaging. The country’s foreign minister has claimed that Iranian officials are reviewing a U.S. proposal and would convey its opinion to Pakistan, a frequent mediator between Washington and Tehran. But other media reports cited an Iranian official who described the U.S. peace plan as an American wish list.
According to CNN, Iran is anticipated to give mediators their response by Thursday.
"[I]nvestors appear to be taking the news as a signal that the U.S. and Iran are strongly committed to not letting the conflict escalate again. That alone was enough to propel Wall Street," Rodda said.
Oil prices hover below $100
Oil prices slipped under $100 a barrel against this backdrop, with traders attempting to determine the outlook for a weeks-long shuttering of the Strait of Hormuz.
Brent crude futures, the global benchmark, were last down 3.7% to $97.48 a barrel, while U.S. West Texas Intermediate crude futures dropped 4% to $91.30 a barrel.
Energy prices have skyrocketed since the start of the conflict, due largely to the effective closure of the strait, a major thoroughfare for around a fifth of the world’s oil. Despite the latest move downwards, oil prices are still well above pre-war levels.
The energy shock forces gasoline pump prices in the U.S. above $4.50 a gallon, levels not seen since the height of the COVID-19 pandemic in 2022. But Trump has expressed some surprise that oil prices have not moved even higher, telling reporters that he thought they would "go to $200, $250."
Even if crude had reached such heights, he added, the war in Iran would have been "worth it."
More labor market indicators ahead of jobs report
Away from the Middle East, market participants received some more data on the U.S. labor market ahead of Friday’s widely-anticipated April nonfarm payrolls report.
As per Challenger, Gray & Christmas, U.S. job cuts increased 38% M/M to 83,387 in April, the highest total for this month since 2009.
“Technology companies continue to announce large-scale cuts and are leading all industries in layoff announcements. They are also often citing AI spend and innovation. Regardless of whether individual jobs are being replaced by AI, the money for those roles is,” Andy Challenger, chief revenue officer at Challenger, Gray & Christmas, said in a statement.
Separately, the U.S. Department of Labor said the number of Americans filing for initial jobless claims in the past week inched up to 200k, lower than the expected figure of 205k. Conversely, Americans filing for continuing claims eased to 1.776 million.
"U.S. Initial Claims increase to 200K from an upward revision of 190K below the 13-week moving average of 209K. The U.S. labor market remains remarkably stable and the pace of firings relatively low while continuing claims eased to 1.766 million. I expect the April U.S. Jobs Report to show a net change in total employment of 60K and an 4.3% unemployment rate. New jobs will skew towards lower paying employment," Joseph Brusuelas, principal & chief economist at RSM US, said.
Earnings season continues
Turning to individual stock moves, Coach-owner Tapestry lifted its annual forecast for a third time in 2026, underpinning by solid demand among younger customers. However, the stock slid more than 7% after the opening bell.
DoorDash gained more than 4% on a second-quarter marketplace gross order value outlook which topped analysts’ estimates.
Kenvue said it would not provide any forward guidance due to a pending tie-up with Kimberly-Clark. Shares of the consumer health group were slightly lower.
Elsewhere, household appliance manufacturer Whirlpool slumped 14.7% after the firm slashed its full-year revenue forecast.a
