S&P 500 jumps to a new record close as Micron shares lead tech rally

The S&P 500 and Nasdaq Composite rose to fresh intraday all-time highs on Tuesday, led by technology, as traders weighed the prospects of a potential U.S.-Iran deal being reached to end the war.

The broad market index gained 0.61% and ended at 7,519.12, while the tech-heavy Nasdaq gained 1.19% to 26,656.18. Both indexes also closed at records. The Dow Jones Industrial Average lost 118.02 points, or 0.23%, ending at 50,461.68. U.S. stock markets were closed Monday due to the Memorial Day holiday.

Shares of Micron Technology jumped 19% and topped $1 trillion in market capitalization amid bullishness among analysts on the Street. UBS in particular sees more than 100% upside ahead for the stock, citing benefits from its long-term agreements. The name finished last week with a sizable gain, though it started off the period with losses amid a broader sell-off in memory chip names.

Fellow memory chip stocks Seagate Technology and Western Digital followed Micron higher, gaining 4% and 8%, respectively. The Roundhill Memory ETF (DRAM) added more than 14% and scored a fresh record high.

President Donald Trump said Monday that talks with Iran to end the war were “proceeding nicely.” That said, he did warn the U.S. could go on the offensive if negotiations break down.

On top of that, the U.S. said it conducted “self defense” strikes in southern Iran early Tuesday. Some of those targets included missile launch sites and Iranian boats attempting to place mines, U.S. Central Command spokesman Tim Hawkins said. He added that the U.S. used “restraint during the ongoing ceasefire” between the two countries.

U.S. crude came off its lows following the strikes, with West Texas Intermediate futures for July, falling 2.81% to settle at $93.89 per barrel. Brent, meanwhile, gained 3.58% and settled at $99.58 per barrel.

“You’ve got investors that are, I think, pathologically optimistic here that the war is going to end soon and that things are going to resume back to the way they were prior to the war,” said Ron Albahary, LNW chief investment officer.

There’s a “tug of war going on” in the market, Albahary added. Investors are “believing in this tsunami of capex that has been driving markets higher,” he said, while the base of the U.S. economy is “still relatively fragile,” with inflation “likely becoming systemic.”

A decline in oil prices boosted equities last week, as U.S. crude saw its worst week since April 17. The S&P 500 climbed 0.9% last week to notch its longest weekly winning streak since late 2023. The Dow climbed 2.1%, marking its third weekly gain in four weeks. The Nasdaq rose 0.5% last week, its seventh in eight weeks.

However, with crude still trading well above the levels seen earlier in the year – and price pressures remaining elevated – investor expectations for easier Federal Reserve policy have been tempered. In fact, traders are pricing in a roughly 11% chance of a rate hike in July, up from 0.9% a month ago, according to the CME Group’s FedWatch tool.