US stocks rose to session highs following two straight losing days, as President Donald Trump said he’s called off planned military strikes on Iran, hours after threatening to escalate the three-month war.
The S&P 500 Index jumped 1.2% as of 1:41 p.m. in New York, after the president said in a social-media post that a deal is close. The tech-heavy Nasdaq 100 Index advanced 2.3%, after its first back-to-back sessions with at least 1% declines since March as tension between the two sides escalated. The Philadelphia Semiconductor Index, home to chip bellwethers such as Nvidia Corp. and Advanced Micro Devices Inc., rallied nearly 5%. The Middle East conflict whipsawed the oil market, with Chevron Corp. and Exxon Mobil Corp. giving up early gains to trade modestly lower.
Nine of the 11 sectors in the S&P 500 rose, led by industrials and materials, while energy and communication services drove losses. Despite the rebound in chip shares, other corners of Big Tech wavered. A basket of the so-called Magnificent Seven companies was flat, driven by declines in Microsoft Corp., Alphabet Inc. and Meta Platforms Inc.
Among individual shares, Intel Corp. rose 5.5% after BofA Global Research raised its recommendation to buy from underperform on expected growth from central-processing-unit sales. Oracle — the biggest S&P 500 decliner — dropped 11% after the company reported quarterly capital expenses that were higher than estimates.
Major US indexes were weighed down earlier as a report showed the producer price index for May increased 6.5% from a year earlier, the most since 2022. The data showed the fallout from the Iran war continued to fan inflation pressures, sustaining speculation the Federal Reserve’s next move will be to raise interest rates.
“This inflationary spike is likely temporary and will subside once the Iran war ends, but there is increasing concern that the Iran conflict will persist for some time, which means higher oil prices and higher inflation,” wrote Clark Bellin, president and chief investment officer at Bellwether Wealth.
A strong reading on the US labor market last week helped soothe concerns about slowing growth, though at the same time it renewed worries about high prices.
Concern about sticky inflation and the pressure on the Fed to contain it briefly pushed the Cboe Volatility Index, or VIX, above 21, a level that signals concern among traders. With Elon Musk’s SpaceX expected to go public this week, the prospect of another trillion-dollar-plus company hitting the market may be forcing investors to reposition portfolios at the cost of their tech stocks, analysts say.
Shares in rocket, satellite and space-linked companies including Redwire Corp. and Firefly Aerospace Inc. advanced 11% and 13%, respectively, before the much-anticipated SpaceX initial public offering.