US Three Major Stock Indexes Hit Record Highs; Oil Prices Fall
At 2:00 AM Beijing time on May 28, US stocks closed higher Wednesday, with all three major indexes hitting record highs. Micron Technology extended its historic rally, while oil prices fell on hopes of a US-Iran ceasefire.
The Dow rose 182.60 points (0.36%) to 50,644.28; the Nasdaq rose 18.55 points (0.07%) to 26,674.73; the S&P 500 rose 1.24 points (0.02%) to 7,520.36.
Falling oil prices provided support. US crude futures fell more than 5% to around $88 per barrel after Iran's state TV reported the country committed to restoring commercial navigation through the Strait of Hormuz to pre-war levels within a month.
However, the White House denied the report, calling it "completely fabricated."
Micron Technology closed up 3.6% on Wednesday. The stock surged 19% on Tuesday after a bullish report from UBS, pushing its market cap above $1 trillion for the first time.
UBS believes the stock still has more than double the upside as memory suppliers sign long-term agreements to facilitate AI implementation. Investors have turned to memory chipmakers as a preferred way to participate in the AI bull market. Micron's Korean peer SK Hynix also reached a $1 trillion market cap overnight.
The tech sector's rise pushed the broader indexes and the tech-heavy Nasdaq to new intraday and closing highs on Tuesday. The S&P 500 rose 0.61% on Tuesday, the Nasdaq surged 1.19%, while the blue-chip Dow fell 118.02 points (0.23%).
Investors were also encouraged by President Trump's comments that negotiations to end the war with Iran are "going well." Despite a US "self-defense" strike in southern Iran early Tuesday, Central Command spokesman Tim Hawkins said the US exercised restraint during a "continued ceasefire" between the two countries.
Expectations of easing Iran tensions, coupled with a strong earnings season, drove stock market records this month. But Drew Pettit, US equity strategist at Citi, said there was limited room for further gains.
He said on CNBC Tuesday afternoon: "Rates are high right now, 10-year Treasury yield around 4.50%, inflation expectations are rising, and the yield curve has actually flattened more this year. All these factors do not support a sustainable higher valuation multiple."
Pettit's year-end target for the S&P 500 is 7,700, implying only modest upside of 2%.
Goldman Sachs took a different view. Late Tuesday, the bank raised its S&P 500 year-end target from 7,600 to 8,000, citing continued strong earnings growth despite some geopolitical headwinds.
Editor: Zhang Jun SF065
