S&P 500, Nasdaq shrug off West Asia hostilities, surge to new records, even as Dow sulks

Benchmark indices on Wall Street followed a near-familiar script on Tuesday, May 26, as trading resumed after Monday's Memorial Day holiday. The Chip stocks rally took the S&P 500 and Nasdaq to new highs, shrugging off the potential resumption of hostilities in and around the Strait of Hormuz.

While the S&P 500 and Nasdaq made new intraday records, surging 0.6% and 1.2% respectively, the Dow Jones underperformed, ending a rangebound trading session with losses of 120 points.

Tuesday's rally on the S&P 500 and Nasdaq was led by Micron, shares of which surged 19%, after UBS increased its price target to $1,625, expecting the stock to more than double from current levels. In the process, Micron also crossed $1 trillion in market capitalisation, joining the list of tech companies from Nvidia to Broadcom.

Micron's shares are up 184% this year so far.

Sentiments were also aided by a fall in Treasury yields as traders pared back on hopes of the Fed hiking interest rates in the near future on fears of inflation.

US-Iran Deal: No Progress Yet

Wall Street continues to remain hopeful of a peace deal between the US and Iran, with the former continuing to cite progress in negotiations, though Secretary of State Marco Rubio stated that any accord will take a few days to finalise.

The fragility of the peace negotiations were evident on Tuesday after the two sides exchanged strikes overnight as per reports. The US Central Command also denied reports of them helping vessels across the Strait of Hormuz.

"While we’d like to share the optimism, there have been enough setbacks in the process of crafting an agreement between Washington and Tehran that we’ll remain cautious until there is more tangible progress," said Ian Lyngen at BMO Capital Markets.

Oil prices continue to remain steady this morning, with Brent returning to $100 a barrel overnight. Aluminium prices are at a four-year high on fears of China cutting back on output, while the US 10-year yield remains stable around the 4.5% mark.

Salesforce and Snowflake are some companies that will be reporting their results later today.