New York stocks set fresh all-time highs on the 4th (local time), with the S&P 500 and the Dow Jones Industrial Average both closing at record levels. The S&P 500 rose 1.79% to 7,736.52, breaking above 7,700 for the first time, while the Nasdaq jumped 2.59%.
International oil prices plunged to $75.77 a barrel after U.S. Treasury Secretary Scott Bessent said a deal to reopen the Strait of Hormuz could be reached “today or tomorrow.” The market has now seen losses of around 10% over the past two days.
As oil prices eased, the 10-year U.S. Treasury yield fell to 4.61%, and the Philadelphia semiconductor index surged 6.55% as stronger-than-expected results from hyperscalers revived expectations for continued AI investment.
Performance announcements produced mixed results. Palantir soared 29.4%, while SpaceX and AMD, despite reporting better-than-expected earnings, fell 7% to 8% in after-hours trading.
A single remark sent oil prices lower and stock records higher. On signs that shipping lanes in the Middle East may reopen, Wall Street is staging a relief rally.
On the 4th (local time) in New York, the S&P 500 closed at 7,736.52, up 1.79% from the previous session, setting a new all-time high for the first time in about two months. It was the first time the index had broken above 7,700. The Dow Jones also rose 1.71% to 54,085.88, setting a record for the second straight day, while the Nasdaq jumped 2.59% to 26,584.99.
“A deal today or tomorrow” sent oil prices down 10% in two days
The person who sparked the rally was U.S. Treasury Secretary Scott Bessent. In a television interview, Bessent said, “We are currently negotiating with Iran,” adding that there is a possibility of reaching a deal “today or tomorrow” to reopen the Strait of Hormuz and return the conflict to a normal footing. He also said that if an agreement is reached, freedom of navigation for commercial vessels would be guaranteed.
Bessent also outlined the potential impact in concrete terms. He explained that nearly 1,000 ships are waiting to depart inside the strait, so once the shipping lane reopens, supply disruptions could ease quickly.
He said the effects would extend beyond crude oil to fertilizers, refined petroleum products, and industrial gases. Secretary of State Marco Rubio also said the U.S. is involved in talks between Oman and Iran and expects an agreement soon, while mediator Qatar said diplomatic contacts between the two sides have made substantial progress.
The Strait of Hormuz is a sea lane through which one-fifth of the world’s oil supply passes. Since the attack on the strait last month, fears of a blockade had been adding a risk premium to oil prices, but that premium is now rapidly fading on signs of negotiation progress.
West Texas Intermediate crude fell 5.69% to $75.77 per barrel, and Brent crude dropped 5.3% to $79.36. Both benchmark grades have fallen by around 10% over the past two days and have moved back below the $80 mark.
As oil prices declined, interest rates also moved lower. Lower oil prices reduce inflation pressure, which in turn helps push market rates down. The yield on the 10-year U.S. Treasury fell 0.063 percentage point from the previous day to 4.61%, while the 2-year yield, which is more sensitive to monetary policy expectations, ended at 4.19%. A weaker-than-expected report on June U.S. job openings also helped depress yields, since a cooling labor market strengthens the case for the Federal Reserve to cut rates.
The market reversal is dramatic compared with early last month. Right after the attack on the strait, oil prices surged and semiconductor stocks plunged, sending all three major indices lower together. The fact that the picture has completely flipped in just one month — with oil prices tumbling, semiconductors rallying, and indices hitting records — underscores how Middle East tensions remain the biggest factor shaping market direction, analysts say.
Expectations of a longer AI investment cycle sent semiconductors soaring the most
Semiconductors were the biggest winners by sector. The Philadelphia semiconductor index surged 6.55%, and an ETF tracking memory companies jumped 7.35%. Not only design and foundry firms such as Nvidia (up 2.56%), TSMC (up 2.72%), and Broadcom (up 6.61%), but also equipment makers like Lam Research (up 7.85%) and ASML (up 4.22%) rose across the board.
SK hynix American depositary receipts, listed in New York, soared 8.2% amid a Wall Street target price as high as $320, drawing strong attention from Korean investors.
Technical news from Korea’s semiconductor sector also added momentum. Samsung Electronics unveiled zHBM on the same day, a next-generation structure that stacks memory vertically on top of AI chips, presenting a new card in the race for high-performance memory. The structure is designed to improve both AI chip performance and power efficiency, and analysts say it boosted investment sentiment for related stocks amid expectations for the memory cycle.
Supporting that backdrop is a signal from earnings season that the investment cycle is still intact. Hyperscalers such as Amazon and Microsoft reaffirmed they were expanding data center investment along with solid results, reviving expectations that the AI infrastructure investment cycle will continue for longer. Because more data centers mean more orders for chips, memory, and manufacturing equipment, buying spread across the entire semiconductor ecosystem, according to analysts.
The tailwind even reached industrial equipment stocks. Caterpillar, a heavy machinery maker, rose 5.60% after reporting better-than-expected earnings thanks to the AI data center construction boom. Since building data centers requires excavation work and power infrastructure, analysts say the AI spillover effect is translating into demand for construction equipment.
Palantir, which disclosed strong results the previous day, led the advance with a 29.4% surge in regular trading.
In a market where even good earnings are sold off, higher expectations are the key variable
Even amid the celebratory mood, warning signs appeared. SpaceX, which had risen more than 9% during regular trading, fell about 7% in after-hours trading after releasing earnings that beat expectations. The decline was attributed to concerns about costs tied to large-scale investment. AMD also reported results that exceeded market forecasts, yet its after-hours share price weakened by more than 8%.
The fact that even strong earnings can trigger share-price declines suggests that market expectations have become very high. When optimism is already reflected in stock prices, beating forecasts is no longer enough; companies need to deliver surprises that far exceed expectations to trigger additional gains. As the rally continues, each earnings release could become a catalyst for sharp volatility, observers say.
The move is also seen as a positive for the Korean stock market. As seen in the surge in the memory ETF and SK hynix ADRs, the U.S. market’s confirmation of a continuing AI investment signal is directly linked to sentiment toward Korea’s major semiconductor stocks. Lower oil prices are also viewed as easing pressure on both inflation and the trade balance for South Korea, which imports all of its oil.
However, no agreement has yet been formally signed. Iran is still claiming control by demanding authority to regulate ships entering the strait and monitor those leaving, leaving a gap in the negotiations. Since there remains a possibility that the sharp drop in oil prices could reverse, the success or failure of a Hormuz agreement is expected to be the key turning point for whether the relief rally can continue.