Wall Street rallied strongly on Wednesday, with the Dow Jones Industrial Average surging more than 600 points as optimism over a potential US-Iran agreement combined with robust earnings and continued enthusiasm for artificial intelligence-driven growth.
The Dow rose 612 points, or 1.24%, while the S&P 500 climbed 1.46% to a record close of 7,365.09.
The Nasdaq Composite led gains, advancing 2.03% to 25,838.94, also setting a new high.
Geopolitical optimism drives risk appetite
Investor sentiment was buoyed by reports that Washington and Tehran were nearing a deal to end the conflict.
According to Axios, the proposal could include a moratorium on nuclear enrichment, while an Iranian foreign ministry spokesperson said the country was evaluating a US proposal.
Despite the optimism, Donald Trump cautioned that an agreement was not guaranteed, calling it a “perhaps, a big assumption” that Iran would accept the terms.
Equity markets briefly pared gains following his remarks.
“If they don’t agree, the bombing starts, and it will be, sadly, at a much higher level and intensity than it was before,” Trump wrote in a post on Truth Social.
The president also announced a pause in “Project Freedom,” a US initiative to guide ships through the Strait of Hormuz, citing “the fact that Great Progress has been made toward a Complete and Final Agreement with Representatives of Iran.”
Oil markets reacted sharply to the prospect of de-escalation.
West Texas Intermediate crude fell 6% to above $95 per barrel, while Brent crude dropped about 7% to just over $101.
Lower energy prices helped ease inflation concerns and supported equities.
AI-driven earnings fuel technology rally
Beyond geopolitics, strong corporate earnings—particularly in the semiconductor sector—provided a major catalyst for the rally.
Advanced Micro Devices surged nearly 19% to an all-time high after forecasting second-quarter revenue above expectations, driven by robust demand for data center chips.
The company also beat first-quarter estimates on both revenue and profit.
The gains spilled over into the broader chip sector.
The PHLX Semiconductor Index climbed 4.5%, bringing its gains for 2026 to 62%. Intel rose about 4.5%, while the VanEck Semiconductor ETF advanced roughly 4%.
Other AI-related and technology stocks also posted strong gains. Nvidia rose 5.7%, while Super Micro Computer surged 24.5% after issuing an upbeat forecast.
The rally reflects sustained investor enthusiasm for AI-driven growth.
More than 80% of S&P 500 companies reporting earnings through early May have exceeded analyst expectations, according to LSEG I/B/E/S data, putting the index on track for its strongest profit growth in over four years.
Broader market strength and economic backdrop
The rally extended gains from the previous session, when stocks were supported by strong earnings and a ceasefire holding between the US and Iran.
Market breadth was positive, with advancing stocks outnumbering decliners by a 1.7-to-one ratio on the S&P 500.
Nine of the 11 major sectors ended higher, led by industrials and information technology, which rose 2.6% and 2.56%, respectively.
Volume on US exchanges was elevated at 18.8 billion shares, compared with a 20-session average of 17.6 billion.
Economic data also reinforced confidence in the market outlook.
US private payrolls posted their largest increase in 15 months in April, signaling continued labor market resilience despite geopolitical uncertainty.
Investors are now turning their attention to the upcoming nonfarm payrolls report, which is expected to show job growth of around 62,000 for the month.
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