US Stock Indexes Hit Records on Iran Peace Hopes, May 28

The Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all closed at record highs this week as investors grew optimistic about a potential US-Iran peace deal. Oil prices fell sharply on hopes the deal would reopen the Strait of Hormuz. Micron Technology jumped 19% to become the latest company to cross $1 trillion in market value, driven by strong AI chip demand and analyst upgrades.

All Three Indexes Reach Record Closes

The Dow Jones gained 182.60 points, or 0.36%, to close at a record 50,644.28 on May 26. The S&P 500 ticked up 0.02% to 7,520.36, also a record close. The Nasdaq Composite edged up 0.07% to 26,674.73. On May 25, the S&P 500 had gained 0.61% to 7,519.12 and the Nasdaq rose 1.19% to 26,656.18, both hitting fresh intraday highs. The Dow fell 118.02 points, or 0.23%, to 50,461.68 on that day as investors rotated out of tech stocks.

Oil Prices Drop on Peace Deal Optimism

US crude oil fell 5.55% to settle at $88.68 per barrel on May 26 after Iranian state media said the country would restore commercial traffic through the Strait of Hormuz to pre-war levels within one month. Brent crude initially dropped 4.8% but recovered to a 3.1% loss, trading above $93.50 per barrel. The White House later denied the Iranian report as a “complete fabrication.” Lower oil prices supported energy-sensitive stocks, particularly benefiting the Dow’s financial and industrial sectors.

Micron Joins the $1 Trillion Club

Micron Technology surged 19% on May 25 to top $1 trillion in market capitalization for the first time. UBS raised its price target to $1,625 from $535, citing more than 100% upside from long-term AI chip agreements. On May 26, Micron closed 3.6% higher as the broader chip sector took a breather. Fellow memory stocks Seagate and Western Digital gained 4% and 8% respectively on May 25. The Roundhill Memory ETF added 14% to hit a fresh record high.

Chip Sector Momentum Slows

While Micron held gains, other semiconductor stocks lost steam. Intel and Qualcomm fell 1% and 6% respectively on May 26 after rising 3% and 4% the day before. Analysts noted that current chip valuations have become extremely frothy ahead of themselves, even as AI demand remains strong. Meyka rates the S&P 500 a C+ with a 12-month target of $7,250.83, suggesting limited upside from current levels.

Final Thoughts

US stock indexes hit record closes this week on Iran peace hopes and falling oil prices. With Meyka rating the S&P 500 a C+ and forecasting $7,250.83 in 12 months, current valuations leave little room for gains.

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