U.S. stocks surged to record highs on Thursday as oil prices retreated, fueled by optimism over a potential U.S.-Iran ceasefire and stronger-than-expected corporate earnings. The S&P 500 and Nasdaq Composite both hit all-time peaks, while the Dow Jones Industrial Average edged higher, according to multiple reports. Meanwhile, Brent crude fell 4.6% to $92.25, and U.S. crude dropped 5.5% to $88.68, easing pressure on energy-dependent sectors.
ETFs and Tech Stocks Lead the Rally
Thematic exchange-traded funds (ETFs) dominated the market’s upward surge, with the Procure Space ETF (UFO), WisdomTree Quantum Computing ETF (WQTM), and Roundhill Memory ETF (DRAM) all hitting intraday record highs. These funds, which focus on AI infrastructure and next-generation technologies, signaled a shift in investor appetite toward specialized growth bets, according to Yahoo Finance. The Nasdaq Composite (^IXIC) and S&P 500 (^GSPC) also reached new milestones, driven by strong performances in tech and consumer discretionary sectors.
Shares of chipmakers and memory-focused companies like Sandisk, AMD, and Qualcomm surged, with Sandisk climbing over 6% and AMD gaining 5%. The Roundhill Memory ETF rose more than 4%, reflecting heightened demand for semiconductor-related assets. “The market has been expecting some type of MOU — memorandum of understanding — here,” said David Wagner, head of equities at Aptus Capital Advisors, citing the potential U.S.-Iran agreement as a catalyst for risk-on sentiment.
Oil Prices Drop as Ceasefire Talks Progress
The retreat in oil prices followed reports of a 60-day memorandum of understanding (MOU) to extend the U.S.-Iran ceasefire, though President Donald Trump had yet to approve the deal, according to CNBC. The West Texas Intermediate (WTI) crude fell below $89 a barrel, while Brent futures traded around $93, down from earlier intraday peaks. The price declines eased concerns about inflationary pressures, with the 10-year Treasury yield slipping to 4.48%.
For more on this story, see S&P 500 Loses Third Session as Rising Yields Drag Down Stocks.
The drop in oil prices benefited energy-dependent sectors, including airlines and logistics firms. Norwegian Cruise Line Holdings jumped 6.1%, United Airlines rose 6.3%, and Delta Air Lines hit an all-time high. However, oil and gas stocks like Exxon Mobil and Chevron declined, dragged down by lower commodity prices. “Lower oil prices will remove a big drag on their profits,” said AP News, highlighting the sectoral divergence.
Corporate Earnings Outperform Expectations
Strong earnings reports further bolstered the market, with companies like Bath & Body Works and Abercrombie & Fitch reporting better-than-anticipated profits. Bath & Body Works surged 9.7%, and Abercrombie & Fitch climbed 8.9%, driven by improved margins and consumer demand. Lululemon Athletica gained 2.9% after appointing new board members, including a former ESPN executive and a former On co-CEO.
However, not all stocks fared well. Dick’s Sporting Goods fell 6% despite beating earnings estimates, as analysts questioned its profitability. “Analysts pointed to how much profit it wrung out of each $1 in revenue, which some called a bit weak,” according to AP News. Meanwhile, Snowflake’s shares soared 35% after issuing optimistic guidance and announcing a $6 billion investment in Amazon Web Services over five years.
Central Bank Signals and Inflation Data
The Federal Reserve’s inflation data provided additional clarity, with the Commerce Department reporting a softer-than-expected 0.4% rise in the personal consumption expenditures (PCE) price index for April. The 12-month inflation rate remained at 3.8%, reinforcing speculation that pricing pressures may be easing. “The cooler monthly reading gave traders some hope that pricing pressures have started to ease,” said CNBC, though the annual rate still exceeded the Fed’s 2% target.
Traders remained cautious, however, as the market awaited further details on the U.S.-Iran agreement. “You’re going to see the discretionary names run as a first knee-jerk reaction to a lot of this news, which can drive the market higher,” Wagner added. The Dow Jones Industrial Average, which had hit a new intraday record on Wednesday, remained relatively flat on Thursday, gaining 17 points.
What’s Next for Investors?
The interplay between geopolitical developments and economic data will likely shape the market’s next moves. A finalized U.S.-Iran MOU could further ease oil prices and reduce inflationary risks, while stronger corporate earnings may sustain the rally. However, the absence of a clear timeline for Trump’s approval of the ceasefire introduces uncertainty. “The market is caught between hope and caution,” said one analyst, noting that “the 10-year Treasury yield remains a key indicator of inflation expectations.”
For now, investors are focused on the broader narrative of economic resilience. With the S&P 500 and Nasdaq Composite approaching uncharted territory, the coming weeks will test whether this momentum can withstand potential headwinds, including geopolitical tensions and shifting monetary policy.
