U.S. equities opened higher on Thursday, with the Dow Jones Industrial Average climbing 246 points, as investors rotated back into beaten-down technology shares following a sharp selloff earlier in the week. The S&P 500 rose 0.29%, and the Nasdaq Composite added 0.28%, though gains were capped by escalating geopolitical tensions in the Middle East and a corresponding rise in crude oil prices.
The rebound came after a steep decline on Wednesday, when major Wall Street indexes fell more than 1% amid another rout in semiconductor stocks. The S&P 500 has now declined roughly 4% from its record closing high in early June, while technology stocks have entered correction territory, dropping 10% from their recent peak.
Chip Stocks Lead the Recovery
Semiconductor shares were the primary drivers of Thursday's gains. Nvidia, Intel, and Micron Technology advanced between 0.62% and 8%, while the iShares Semiconductor ETF (SOXX) climbed about 3%. Intel received an additional boost after Bank of America upgraded the stock to Buy from Underperform, citing growing demand for central processing units and opportunities tied to the rise of agentic artificial intelligence.
The sector's recovery follows a difficult week for chip stocks. The semiconductor ETF had already suffered a 10% decline on Friday, prompting some investors to question whether the powerful rally fueled by artificial intelligence demand had run its course. Market participants are also looking ahead to the highly anticipated market debut of SpaceX on Friday, which is expected to be valued at roughly $1.75 trillion to $1.8 trillion, making it the largest public debut on record. Some traders believe recent weakness in semiconductor shares may partly reflect investors raising cash to participate in the offering.
Iran Tensions Push Oil Higher
Despite the rebound in equities, geopolitical concerns continued to weigh on sentiment. West Texas Intermediate crude futures rose nearly 1% to around $90 per barrel after President Donald Trump signaled potential military action against Iran. Trump said the United States will hit Iran "very hard tonight" and later stated on Truth Social: “At some point in the not too distant future, we will be taking Kharg Island, and other oil infrastructure points, and assume total control of their Oil and Gas Markets.”
The comments followed additional U.S. military action in the region. U.S. Central Command said it launched more "self-defense strikes" against Iran late Wednesday at Trump's direction. The escalation caused stock futures to trim some of their earlier gains as investors assessed the potential economic consequences of higher energy prices. For more on how geopolitical tensions are impacting global markets, see our coverage of the Nikkei 225 drop amid Iran tensions.
Economic Data and Sector Rotation in Focus
Investors also digested fresh economic data showing producer prices increased more than expected in May. The producer price index rose 1.1%, above economists' expectations of 0.7%, while core inflation, excluding food and energy, came in at 0.4%. Separately, new claims for unemployment benefits increased modestly last week. The Federal Reserve is widely expected to leave interest rates unchanged at its June 17 policy meeting, although markets continue to price in at least one quarter-point rate increase before year-end.
Outside the semiconductor sector, Oracle shares fell 12% after the company unveiled plans to raise an additional $20 billion in equity and debt financing to support artificial intelligence infrastructure investments. Meanwhile, corporate travel platform Navan surged 11% after raising its full-year revenue and operating income forecasts, citing strong business travel demand and continued growth among enterprise customers. For a broader perspective on market movements, see our analysis of the Dow's recent rise amid chip selloff and SpaceX IPO.
As the market navigates these crosscurrents, investors are closely watching the interplay between geopolitical risks, inflation data, and sector rotation. The rebound in chip stocks suggests that some traders see the recent selloff as overdone, but the path forward remains uncertain given the dual pressures of rising oil prices and potential Fed tightening.
This article is for informational purposes only and does not constitute financial advice.
