- President Trump canceled a plan to strike Iran and is finalizing a peace plan with the country, a decision that Wall Street Journal reported comforted investors and lifted U.S. equity markets in afternoon trading Thursday.
- The S&P 500 ended at 7,266.99, a 1.8% gain; the Nasdaq Composite closed at 25,169.5, up 2.5%; and the Dow Jones Industrial Average rose to 49,918.78, a 1.9% increase.
- Chip stocks led the rally, with the PHLX Semiconductor Sector index ending nearly 8% higher after a volatile week of trading tied to uncertainty about the AI boom.
- The European Central Bank raised its key interest rate Thursday, becoming the first major central bank to do so in response to inflation driven by higher energy prices.
- Oracle shares fell 8.5% after the company reported strong quarterly revenue but rising capital spending and debt that spooked investors.
U.S. stocks rallied Thursday after President Trump scrapped a planned military strike on Iran as the two countries finalize a peace deal, slashing a geopolitical risk that has hung over markets for months. The S&P 500 gained 1.8% to close at 7,266.99, while the tech-heavy Nasdaq Composite rose 2.5% to 25,169.5. The Dow Jones Industrial Average increased 1.9% to 49,918.78, according to verified data from the Federal Reserve.
Oil prices and Treasury yields fell alongside the equity rally, reflecting the reduced premium investors had baked in for the risk of a broader conflict. The move came as Trump’s decision to stand down, reported Thursday by The Wall Street Journal, signaled that the administration is opting for a diplomatic resolution to the conflict that began in March.
Chip stocks powered the day’s gains. The PHLX Semiconductor Sector index rose nearly 8%, bouncing back after a volatile period that saw shares swing on uncertainty about the durability of the artificial intelligence boom. The sector’s sharp recovery pushed indexes higher in the afternoon session after the Iran news broke.
The European Central Bank raised its key lending rate Thursday, the first major central bank to hike in response to energy-driven inflation. The move came as a U.S. inflation indicator that the Federal Reserve tracks closely also pointed to tighter monetary policy ahead. The Fed’s rate-setting committee is scheduled to meet next week.
Oracle shares fell 8.5% after the company published quarterly results that beat revenue expectations but revealed ballooning capital spending and higher debt levels. The decline erased the stock’s gains for the year. Meta Platforms also drew scrutiny from analysts, who said the company’s subscription plans — charging roughly $4 a month for upgraded social-media features or $8 a month for its AI chatbot — would not meaningfully offset its large artificial intelligence expenditures, and that its ability to diversify beyond advertising revenue remained unproven.
In the bond market, Treasury yields fell as investors shifted toward safer assets on the prospect of reduced conflict risk, while lower oil prices added to the disinflationary tone ahead of next week’s Fed meeting.