All Three Major US Stock Indexes Hit Record Highs; Falling Oil Prices Support Market
At 12:00 AM Beijing time on May 28, US stocks closed higher Wednesday, with all three indexes hitting record highs. Micron Technology continued its strong rally, while oil prices fell on hopes of a US-Iran ceasefire.
The Dow rose 182.60 points, or 0.36%, to 50,644.28; the Nasdaq rose 18.55 points, or 0.07%, to 26,674.73; the S&P 500 rose 1.24 points, or 0.02%, to 7,520.36.
The decline in oil prices provided market support. US crude futures fell more than 5% to around $88 per barrel after Iran's state TV said the country committed to restoring commercial navigation in the Strait of Hormuz to pre-war levels within a month.
However, the White House denied the report from Iranian state media, calling it 'completely fabricated.'
Micron Technology closed up 3.6% on Wednesday. The stock had surged 19% the previous day after a bullish UBS report, pushing its market cap above $1 trillion for the first time.
UBS believes the stock still has room to more than double as memory suppliers sign long-term agreements to drive AI adoption. Investors have turned to memory chip makers as a preferred way to participate in the AI bull market. Micron's South Korean peer SK Hynix also reached a $1 trillion market cap overnight.
The tech rally drove broad indexes and the tech-heavy Nasdaq to fresh intraday and closing highs the previous trading day. The S&P 500 rose 0.61% Tuesday, and the Nasdaq surged 1.19%, while the blue-chip Dow fell 118.02 points, or 0.23%.
Investors were also encouraged by President Trump's remarks that negotiations to end the war with Iran were 'going well.' Despite a US 'self-defense' strike early Tuesday morning in southern Iran, Central Command spokesman Tim Hawkins said the US showed restraint during the 'ongoing ceasefire.'
Expectations of easing Iran tensions, combined with a strong earnings season, pushed stocks to records this month. But Citigroup US equity strategist Drew Pettit believes there is limited room for further gains.
'Yields are high right now, with the 10-year Treasury yield around 4.50%, inflation expectations rising, and the yield curve actually flattening this year. All these factors don't support current sustainable higher valuation multiples,' he said on CNBC Tuesday afternoon.
Pettit has an S&P 500 year-end target of 7,700, implying only modest upside of 2% from current levels.
Goldman Sachs holds a different view. The bank raised its S&P 500 year-end target from 7,600 to 8,000 late Tuesday, citing continued strong earnings growth despite some geopolitical headwinds.
