NEW YORK: The Nasdaq ended sharply higher on Thursday, as Micron Technology fuelled a rally in chip stocks that eclipsed fears that renewed US and Iranian attacks might prolong the Middle East conflict and fuel inflation.
Tehran said it hit US military targets in Kuwait, Qatar and Bahrain following US strikes against Iran on Wednesday.
The PHLX chip index surged 3.06%, up for a second straight session. The Dow and the S&P 500 also closed higher.
Micron Technology jumped 4.5% after the company laid out plans to invest more than US$250 billion in the US through 2035, to benefit from demand for memory chips to supply the boom in artificial intelligence. Applied Materials climbed 3.2% and Sandisk surged 7.6%.
AI-related stocks have been volatile lately as investors worried about the sustainability of a rally that has helped Wall Street reach record levels in 2026.
"This is still very much an AI bull market. For a bit, it was starting to broaden out, but that's contingent on oil prices and interest rates staying anchored, and with this flare-up in the Middle East, that calls that part of the bull market into question," said Ross Mayfield, investment strategy analyst at Baird in Louisville, Kentucky.
Meta Platforms rose after Reuters reported that the company plans to manufacture AI chips starting in September.
The S&P 500 climbed 0.81% to end the session at 7,543.66 points. The Nasdaq gained 1.30% to 26,206.89 points, while the Dow Jones Industrial Average rose 0.27% to 52,487.41 points.
Seven of the 11 S&P 500 sector indices rose, led by information technology, up 1.65%, followed by a 1.46% gain in consumer discretionary. Following Thursday's gains, the S&P 500 is up about 10% in 2026, and it remains down less than 1% from its June 2 record high close.
With quarterly reporting season set to get under way, analysts on average expect S&P 500 earnings to increase 24% year-over-year, with technology companies accounting for much of that increase, according to LSEG I/B/E/S.
The S&P 500 is trading at about 20 times expected earnings, down from 21 a month ago.
The number of Americans filing claims for unemployment benefits fell last week, suggesting the labor market remained stable despite a slowdown in job growth in June.
The Federal Reserve kept interest rates unchanged at its June meeting, under new chair Kevin Warsh, but minutes released on Wednesday showed a few policymakers saw a case for raising borrowing costs before ultimately agreeing to hold steady.
Traders are pricing in a likely 25-basis-point rate hike by the Fed's December meeting, according to CME's FedWatch tool.
PepsiCo fell 3.3% despite the snacks and soda giant beating second-quarter revenue estimates. Costco Wholesale's shares sank 4.2% to a six-month low after the retailer reported decelerating comparable sales for June.
Advancing issues outnumbered falling ones within the S&P 500 by a 1.5-to-one ratio. Volume on US exchanges was relatively light, with 14.7 billion shares traded, compared to an average of 22.9 billion shares over the previous 20 sessions. — Reuters
