NEW YORK: On Wall Street, the benchmark S&P 500 and tech-heavy Nasdaq Composite rallied to record closing highs on Wednesday as investors were encouraged by corporate earnings and hopeful of progress in US-Iran negotiations.
The Nasdaq notched a record finish for the first time since October 29 and briefly touched an intraday record high with boosts from software stocks and the broader technology sector, just 13 trading days after confirming that it was in a correction due to worries about the Middle East war.
Equities have found strong support this week from investor hopes that Washington and Tehran could return to the negotiating table with a view to ending the war, which has caused widespread disruption in global oil markets, reignited inflation concerns and muddied the interest-rate outlook.
White House Press Secretary Karoline Leavitt told reporters on Wednesday that discussions about a second round of talks with Iran were ongoing and productive but said reports that the US requested a ceasefire in the Iran war were wrong.
Meanwhile, the US Treasury Department said it was targeting Iran's oil transportation infrastructure with sanctions on more than two dozen individuals, companies and vessels.
The benchmark S&P 500 index hit its first intraday record since the conflict erupted and notched a record closing high on Wednesday after ending Tuesday's session just slightly short of the record. At its weakest point in March, the benchmark had closed 9% below its prior record on January 27.
"A lot of people looked at that recent correction simply as a ‘sale,’" said Gabriel Shahin, CEO and founder of Falcon Wealth Planning in Los Angeles. "When you strip away the headlines, there’s nothing fundamentally wrong with our businesses or the broader economy. Investors are looking at the resilience of the S&P and realising the engine is still humming."
The Dow Jones Industrial Average fell 72.27 points, or 0.15%, to 48,463.72, the S&P 500 gained 55.57 points, or 0.80%, to 7,022.95 and the Nasdaq Composite gained 376.93 points, or 1.60%, to 24,016.02. The Nasdaq also boasted an 11-session winning streak for the first time since November 2021.
Jeff Schulze, head of economic and market strategy at ClearBridge Investments, said Wednesday's gains were thanks to optimism about "a good start" to the earnings season combined with hopes for progress toward a US-Iran resolution, which would be "a pretty good development for the energy market and then the US economy."
"Markets rarely wait for information to be complete," he said. "Although there is still uncertainty out there with regard to the energy disruption, markets are rightly assessing that the risks are declining and the path of least resistance is up."
Shares of Bank of America rose 1.8% after the second-biggest US lender reported growth in first-quarter profit while Wall Street heavyweight Morgan Stanley rallied 4.5% after it reported a jump in quarterly profit. They helped boost the S&P 500 financial index, which finished up 0.8%.
Wall Street's fear gauge, the CBOE volatility index ended down 0.19 point after hitting its lowest level since February 26.
Among the S&P 500's 11 major industry sectors, the S&P 500 information technology index led gainers with a 2.08% rally. One big boost came from software stocks, with the S&P 500 software and services index rallying 4.3%, its third straight day of gains.
Materials, down 1.3%, and Industrials, ending off 1.24%, were the biggest sector losers.
But with oil prices still well above pre-war levels and no certainty about a Middle East resolution, some strategists have cautioned that new catalysts may be needed to sustain market momentum.
"We're going to need more concrete evidence now that the folks that want to get together and talk about peace are able to accomplish something before the deadline of this ceasefire," said Art Hogan, chief market strategist at B. Riley Wealth.
Earlier, Federal Reserve Bank of Cleveland President Beth Hammack said that while she sees no imminent need for the central bank to change its interest-rate target setting, it is possible cuts or even hikes could lie ahead.
Elsewhere in the market, quantum computing stocks had been rallying since before the market open. Rigetti Computing ended the session up more than 13% while D-Wave Quantum finished up 22.6% and Arqit Quantum jumped more than 16%.
Among other stock movers, Broadcom advanced 4.2% after Meta extended its custom chips deal with the firm. Snap shares rose 7.9% after it said it would lay off about 1,000 employees, while footwear maker Allbirds shares closed up 582% following an announcement that it would pivot to AI infrastructure.
Advancing issues outnumbered decliners by a 1.2-to-1 ratio on the NYSE, where there were 271 new highs and 46 new lows. On the Nasdaq, 2,857 stocks rose and 1,945 fell as advancing issues outnumbered decliners by a 1.47-to-1 ratio.
The S&P 500 posted 12 new 52-week highs and one new low while the Nasdaq Composite recorded 104 new highs and 43 new lows.
On US exchanges 18.66 billion shares changed hands compared with the 19.18 billion moving average for the last 20 sessions. — Reuters
