S&P 500, Nasdaq shrug off West Asia hostilities, surge to new records, even as Dow sulks

Wall Street indices opened trading on May 26 after the Memorial Day holiday, with the S&P 500 and Nasdaq hitting new intraday records despite escalating hostilities in the Strait of Hormuz. The S&P 500 climbed 0.6% and the Nasdaq surged 1.2%, while the Dow Jones underperformed, closing down 120 points after a volatile session. The gains were led by chip stocks, with Micron’s shares jumping 19% after UBS raised its price target to $1,625, exceeding expectations of the stock doubling from current levels. This milestone also propelled Micron’s market capitalization over $1 trillion, joining tech giants like Nvidia and Broadcom. Market optimism was further supported by a drop in Treasury yields, as traders scaled back expectations of near-term Federal Reserve interest rate hikes amid inflation concerns. However, hopes for a US-Iran peace deal were tempered by reports of overnight strikes exchanged between the two sides, complicating negotiations. The US Central Command denied claims of assisting vessels through the Strait of Hormuz, while analysts like Ian Lyngen at BMO Capital Markets urged caution, citing past setbacks in talks between Washington and Tehran. Oil prices remained stable, with Brent crude returning to $100 per barrel, while aluminum prices hit a four-year high due to fears of reduced output from China. The US 10-year Treasury yield held steady at around 4.5%. Meanwhile, Salesforce and Snowflake are set to release earnings reports later in the day, adding to investor focus. Micron’s year-to-date performance has been exceptional, with shares up 184% since the start of the year. The company’s surge reflects broader strength in the semiconductor sector, though broader market sentiment remains sensitive to geopolitical risks and policy shifts. Analysts continue to monitor US-Iran negotiations closely, as any breakthrough—or collapse—could significantly impact financial markets.