Wall Street staged a broad rebound on Thursday, erasing earlier losses as a rally in semiconductor stocks and an interim agreement between the United States and Iran helped calm investor fears over inflation. The recovery came just days after the Federal Reserve's hawkish stance triggered a selloff, underscoring the fragile balance between easing geopolitical tensions and lingering monetary policy uncertainty.
The Nasdaq Composite jumped 496.28 points, or 1.91%, to close at 26,517.93, leading the major indexes higher. The S&P 500 advanced 80.48 points, or 1.08%, to 7,500.58, while the Dow Jones Industrial Average eked out a modest gain of 72.15 points, or 0.14%, to finish at 51,564.70. Markets were closed Friday for the Juneteenth holiday, making Thursday the final session of the holiday-shortened week.
Semiconductor Sector Soars
The Philadelphia Semiconductor Index surged 6.4%, driven by a blockbuster announcement that Apple Inc. (AAPL) will collaborate with Intel Corp. (INTC) on chip design and production in the United States. Intel shares skyrocketed 10.6% to an all-time high, while other chipmakers also rallied: Micron Technology Inc. (MU) climbed 9% and Marvell Technology Inc. (MRVL) rose 8%. The move highlighted the market's enthusiasm for domestic chip manufacturing and deepened ties between two tech giants.
Geopolitical and Oil Market Developments
Crude oil prices initially fell sharply after the U.S. and Iran signed an interim deal extending the April ceasefire by 60 days. The agreement allowed the first ships to begin transiting the Strait of Hormuz, a critical chokepoint for global oil, gas, and fertilizer shipments. Brent crude, the international benchmark, recovered to close up 30 cents at $79.85 a barrel, after dipping as low as $76.54 earlier in the session. U.S. West Texas Intermediate crude settled at $76.60. Despite the late recovery, Brent is on track for a weekly drop of over 8% as traders remain cautious about the durability of the ceasefire.
Fed Rate Hike Fears Linger
The rebound came after Wednesday's selloff, triggered by Federal Reserve Chair Kevin Warsh's reaffirmation of the central bank's commitment to fighting inflation. Investors increased their bets on additional rate hikes, which raise borrowing costs and reduce the present value of future corporate earnings. Tony Welch, chief investment officer at SignatureFD, noted that markets were spooked by Warsh's comments, but added that easing oil prices, strong earnings, and solid economic data continue to provide underlying support. Cantor strategist Eric Johnston remarked that the Fed has regained credibility on inflation, which could help stabilize markets over the longer term.
Market Breadth and Sector Performance
Thursday's gains were concentrated in technology and select cyclical names. Small-cap stocks also advanced, and travel-related shares benefited from the prospect of lower fuel costs. However, the rally lacked broad participation: only five of the 11 major S&P 500 sectors finished in positive territory. Analysts described the session as more of a move on tail-risk reduction than a full risk-on rally. Notable losers included Accenture plc (ACN), which plunged 18% after cutting the top end of its full-year revenue outlook, dragging down software and services stocks. Kroger Co. (KR) slipped 8.4% after reporting quarterly profit that missed expectations. SpaceX shares fell 3.6%, marking their second consecutive loss following a strong post-IPO run.
Record Fund Inflows
Investors showed strong appetite for risk during the week, pouring $38.37 billion into U.S. equity funds in the week ending June 17, according to LSEG Lipper data. That marked the largest inflow since November 2024. Tech sector funds alone attracted a record $21.46 billion, underscoring the continued dominance of technology in investor portfolios. The dollar index rose to 100.80, its highest since May 2025, as the Fed's hawkish stance boosted expectations for higher U.S. interest rates.
Outlook and Risks
The rally stands on two shaky legs: a ceasefire that is not yet fully secured, and a Fed that could still deliver additional rate hikes. Switzerland reported that the U.S. canceled planned talks with Iranian officials for Friday, signaling that oil markets may be pricing in less hope for a lasting truce. The rapid reversal in oil prices shows how quickly the inflation narrative can shift. Investors will be watching next week for further clarity on both geopolitical developments and the Fed's policy path.
