NEW YORK: US stocks rebounded on Thursday with semiconductor shares leading gains as optimism about a Middle East peace deal offset worries about a hawkish Federal Reserve under new Chair Kevin Warsh.
Intel’s shares jumped nearly 8 percent to hit a record high after US President Donald Trump said Apple had agreed to work with the company to design and manufacture its chips in the United States.
Other chip stocks also moved higher. Nvidia rose 2.3 percent, while Micron and Marvell Technology added over 8.4 percent and 12 percent, respectively.
The Philadelphia SE Semiconductor index hit a record high and was last up 6.3 percent, while the S&P 500 tech index rose 2.5 percent
All three major indexes sank in the previous session as investors priced in the likelihood of more Federal Reserve rate hikes, after Warsh underscored the need to curb inflation and other policymakers signaled higher borrowing costs ahead.
Meanwhile, the United States and Iran released the text of a signed interim agreement that extends the April ceasefire by another 60 days to allow the two sides to reach a final deal.
Oil prices slid almost 3 percent to their lowest since the first trading day of the Iran war, keeping alive hopes that inflation could be tamed without hiking interest rates. “The signing of the initial agreement between the US and Iran has provided some additional confidence,” said Jim Baird, Chief Investment Officer at Plante Moran Financial Advisors.
Oil prices being down “should provide some near-term relief, both in terms of inflation and might provide a little bit more cover for the Fed to continue to evaluate the current state of policy and at least push back the margins against the narrative that they will need to hike before the end of the year.”
Markets are currently pricing in a 50 percent chance of a 25-basis-point rate hike in September, according to CME Group’s FedWatch tool, higher than 27 percent priced in on Wednesday.
Seven out of 11 major S&P 500 sectors moved higher with utilities and industrials gaining almost 1.3 percent each.
The small-cap Russell 2000 index rose 1.5 percent.
Shares of Accenture tumbled almost 16.6 percent after the company trimmed the top end of its annual revenue forecast. Peers Cognizant Technology Solutions and IBM dropped 9.1 percent and 5.7 percent, respectively.
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