S&P 500, Nasdaq hit record closing highs on AI optimism, Micron joins $1 trillion club

The S&P 500 and Nasdaq Composite closed at record highs on May 26, with the S&P 500 rising 0.61% to 7,519.12 and the Nasdaq gaining 1.19% to 26,656.18, fueled by AI-driven optimism. Semiconductor stocks led gains, with Micron Technology surging 19% to hit a $1 trillion market value after UBS raised its price target to $1,625 from $535. The Philadelphia SE Semiconductor Index also reached an all-time high, rising 5.5%, as Qualcomm climbed nearly 4.5% following a reported chip supply deal with TikTok’s ByteDance. Investors showed resilience amid Middle East tensions, including US strikes on Iran, though optimism grew over potential peace talks. US Secretary of State Marco Rubio suggested a deal with Tehran could take days, while Iran sought the release of $24 billion in frozen funds. Despite geopolitical uncertainty, earnings growth expectations improved, with first-quarter earnings now projected at 29% year-over-year, up from 16.1% a month ago. The Dow Jones Industrial Average fell slightly by 0.23% to 50,461.68, while the Russell 2000 also hit an intraday record. Market breadth remained strong, with advancing stocks outnumbering decliners by a 2.47-to-1 ratio on the NYSE and a 1.72-to-1 ratio on the Nasdaq. New highs dominated, with the S&P 500 posting 42 new 52-week highs and the Nasdaq recording 185. Analysts compared the tech rally to the late 1990s boom, though some cautioned that lessons from past bubbles might prevent a repeat. Volume on US exchanges reached 18.85 billion shares, slightly above the 20-day average. The market’s focus now shifts to potential IPOs from major private AI companies, including SpaceX, as investor confidence in AI-driven growth remains high. Brent crude futures rose about 4% following US military strikes in Iran, adding to uncertainty over shipping flows through the Strait of Hormuz. However, earnings strength and AI optimism outweighed geopolitical concerns, sustaining the market’s upward trajectory.