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Bullish +70

US stocks: S&P 500, Nasdaq at record highs as oil pullback brings relief

AI-generated analysis

📈 US stocks opened higher on Thursday with the S&P 500 and Nasdaq holding close to record highs.

⛽ The rally was aided by a sharp pullback in oil prices, dropping about 4% as hopes grow for a US-Iran deal to normalize crude supplies through the Strait of Hormuz.

🌐 Global stocks also climbed to record peaks while energy prices receded further from the $100 per barrel mark.

🤖 A relentless rally in technology and AI shares continues to play a major role in pushing indices to fresh highs.

💻 However, the tech rally faced some headwinds on Thursday with Arm Holdings sliding 6.9% amid supply concerns for its new AI chips.

📉 Semiconductor peers Intel and AMD also saw their shares drop by 3.3% and 2% respectively.

🛠️ At 9:40 am ET, the Dow Jones rose 0.08% to nearly 50,000, the S&P 500 gained 0.07% to 7,370.55, and the Nasdaq added 0.31%.

⚠️ Despite the overall gains, six of the 11 main S&P 500 sectors were in the red, led by energy which fell 2.1%.

📊 Unemployment claims data showed a rise less than expected, with low layoffs helping to anchor the US labor market.

🔮 Investors are awaiting Friday's nonfarm payrolls report after a strong private payrolls figure on Wednesday.

🏦 Traders continue to bet the Federal Reserve will hold interest rates steady through year-end due to a resilient labor market and elevated energy prices.

🎙️ Several Fed presidents including Neel Kashkari, Beth Hammack, and John Williams are scheduled to speak later in the day.

🔒 Cybersecurity stocks surged after Datadog raised its full-year earnings forecast, with shares jumping 30%.

📱 Snap shares dipped 2.2% as the company warned that first-quarter advertising revenue was impacted by the Middle East conflict.

⚙️ Whirlpool slumped 13% after missing first-quarter sales estimates and suspending its dividend.

📉 Market breadth remained positive on both exchanges with advancing issues outnumbering decliners by over one to one.

📅 The S&P 500 hit 13 new 52-week highs while the Nasdaq Composite recorded 73 new highs during the session.

Bullish Signals
  • US stocks closed near record highs with the Nasdaq Composite reaching 25,918.64 and the S&P 500 at 7,370.55.
  • A relentless rally in technology and AI shares has been a major driver, fueled by strong demand for artificial intelligence and robust earnings.
  • Advanced Micro Devices fell only 2% while maintaining a strong position against competitors like Intel and Arm Holdings.
  • Cybersecurity stocks surged after Datadog raised its full-year earnings forecast, with the stock gaining 30% alongside peers CrowdStrike and Palo Alto Networks.
  • The labor market remains resilient as unemployment claims rose less than expected, supporting expectations for steady economic growth.
  • Advancing issues outnumbered decliners significantly by a ratio of 1.09-to-1 on the Nasdaq, indicating broad market strength.
  • Traders anticipate the Federal Reserve will hold interest rates steady through year-end due to strong economic fundamentals.
  • The S&P 500 posted 13 new 52-week highs, signaling continued momentum in major sectors despite some energy sector pullback.
Risk Factors
  • Snap shares dropped 2.2% as the company revealed its first-quarter advertising revenue was negatively impacted by the Middle East conflict and slowing growth in North America.
  • Whirlpool stock slumped 13% after the home-appliance maker missed first-quarter sales estimates and suspended its dividend.
  • The tech rally showed signs of stalling, with Arm Holdings shares sliding 6.9% due to concerns about securing sufficient supplies for its new AI chips despite a strong earnings forecast.
  • Intel dropped 3.3% and Advanced Micro Devices fell 2%, indicating continued vulnerability in key technology sectors.
  • The Federal Reserve is expected to hold interest rates steady through the end of the year due to a resilient labor market and elevated energy prices, marking a stark shift from several rate cuts investors had previously priced in.
  • Energy leads declines with a 2.1% drop as US stocks react to the pullback in oil prices.
Full Analysis
The Nasdaq Composite and S&P 500 both traded near record highs on Thursday, driven by a sharp pullback in oil prices following reports of a potential peace deal between the United States and Iran. Geopolitical optimism regarding a temporary agreement to halt hostilities suggested the reopening of the Strait of Hormuz, a critical energy artery, causing global oil prices to fall about 4 percent from levels near $100 a barrel. This drop provided relief across all major US indices, with the Nasdaq adding 79.70 points or 0.31 percent to reach 25,918.64 and the S&P 500 gaining 5.43 points or 0.07 percent to settle at 7,370.55. A significant portion of the market rally was also fueled by continued enthusiasm in the technology and artificial intelligence sectors, bolstered by strong demand for AI and robust earnings data. However, this tech-led advance faced a slight stall as investors showed concern over supply constraints for new AI chips at Arm Holdings, which saw its shares drop 6.9 percent despite a positive earnings forecast, while Intel declined 3.3 percent and Advanced Micro Devices fell 2 percent. The energy sector led declines in the broader S&P 500 with a 2.1 percent drop as crude prices retreated, contributing to six of the eleven main sectors trading lower for the day. Beyond the headline movers, economic indicators suggested a resilient labor market with unemployment claims rising less than expected, though traders now anticipate the Federal Reserve will hold interest rates steady through year-end due to persistent energy costs and strong job data. Specific company news included Datadog surging 30 percent on raised earnings forecasts, contrasted with Snap dipping 2.2 percent after its parent noted advertising revenue impacts from the Middle East conflict. Additionally, Whirlpool saw shares slump 13 percent after missing sales estimates and suspending its dividend, while market breadth remained positive with advancing issues outnumbering decliners on both the NYSE and Nasdaq.