Stock market today: Dow slips, S&P 500 and Nasdaq rise on Iran peace prospects

Stocks climbed to new highs on Tuesday as semiconductor stocks rose and hopes of a peace deal between Iran and the US grew.

The Dow Jones Industrial Average (^DJI) fell 0.2%, while the S&P 500 (^GSPC) jumped nearly 0.7% to notch a fresh record close. The tech-heavy Nasdaq Composite (^IXIC) rose 1.2% to hit a new high.

Micron (MU) stock surged 20%, hitting a $1 trillion market capitalization for the first time.

Micron (MU) is up nearly 20% now and is having its best day since 2011.

Today’s Chart of the Day shows the memory chip company now sitting in 11th place among US public companies when ranked by market capitalization.

Micron got there with a stunning 180% rally since the end-of-March lows. Broadcom (AVGO) and Alphabet (GOOGL) are the closest on that leaderboard, both up over 40%.

The rally has also added roughly $650 billion to Micron’s market value, nearly matching Amazon’s (AMZN) gain over the same stretch despite starting from a much smaller base.

The trigger Tuesday was UBS’s Street-high $1,625 price target, which argues AI has changed the memory-chip market — and how investors should value Micron.

May is shaping up to a be a month of trillion dollar milestones for the wold’s largest memory chip makers.

Micron (MU) became the latest company to hit the milestone on Tuesday as shares soared 17% to new all time highs.

The US’s largest memory maker follows in the footsteps of Samsung Electronics (005930.KS), which first touched a $1 trillion market cap on May 6. Shares of the South Korean memory giant have soared more than 150% year to date.

Investors are eyeing SK Hynix (000660.KS) to soon reach the milestone as the South Korean company’s market cap hovered near $988 billion.

Yahoo Finance’s Ben Werschkul reports:

A deal between the US and Iran that includes reopening the Strait of Hormuz has been making progress, but energy analysts warn that global energy markets will take time to normalize.

Translation: Don’t expect quick relief at the gas pump even if a deal gets over the finish line.

The warnings have been legion as shippers face an immediate-term challenge of moving an estimated 1,500 ships currently in the Persian Gulf and tally up the damage to energy infrastructure across the region.

Wolfe Research wrote that “the process of rebuilding commercial and strategic inventories will stretch well into 2027.” Henrietta Treyz of AGF Investments echoed the point and termed it “the Hormuz Hangover,” suggesting a timeline “measured in quarters and years.”

Read more here.

Redwire (RDW) shares surged 26% on Tuesday as a broader rally in space and aerospace companies continued after Elon Musk-led SpaceX filed to go public last week.

Redwire was the No. 2 stock on Yahoo Finance’s trending ticker page, while Rocket Lab (RKLB), Planet Labs (PL), and Firefly Aerospace (FLY) also surged by double-digit percentages.

Redwire shares have been on fire after the company announced last week it had completed testing and delivered its MANUS robotic arm prototype for lunar missions to the European Space Agency.

The company also secured a $15 million follow-on contract from the US Army for its Stalker drone systems. Redwire shares have surged more than 90% this month, putting the stock on track for its strongest monthly performance on record.

US consumer confidence slipped 0.7 points to 93.1 in May amid concerns about inflation stemming from the war in the Middle East, which contributed to a gloomy outlook for the economy.

May’s reading fell from 93.8 in April, but it was higher than the 92.5 print economists expected.

“Consumer confidence edged downward in May as the inflationary impacts of the war in the Middle East intensified,” The Conference Board chief economist Dana Peterson said. Consumers’ references to prices and oil and gas increased for the second month in a row.

Consumers’ assessments of current business and labor market conditions fell by 3.2 points to a reading of 121.2, while consumers’ short-term outlook for business and labor market conditions improved, rising 1 point to a reading of 74.4.

Inflation expectations for the next 12 months inched lower in May but remained elevated, and half of the respondents said they expect interest rates to be higher a year from now.

Large-caps and small-caps alike are filling out today’s record high lists, after the PHLX Semiconductor Index ( ^SOX) opened at a record high, along with Micron (MU).

Here are this morning’s intraday record highs:

Indexes: Nasdaq Composite (^IXIC), Nasdaq 100 (^NDX), S&P 500 (^GSPC), Russell 2000 (^RUT), PHLX Semiconductor Index (^SOX), S&P 500 Equal Weight (^SP500EW), S&P SmallCap 600 (^SP600)

Dow Jones Sectors/Industries: Computer Hardware, Electronic Equipment, Steel, Technology, Technology TR, Tech Hardware & Equip

Large-cap sector ETFs: Technology (XLK)

Small-cap sector ETFs: Small-cap tech (PSCT)

Industry/Style/Country ETFs: ACWI ex US (ACWX), Cybersecurity (CIBR), Memory (DRAM), Emerging markets (EEM), Canada (EWC), Taiwan (EWT), South Korea (EWY), Micro-cap (IWC), Mega Cap (MGC), Momentum (MTUM), Quantum computing (QTUM, WQTM), Semiconductors (FTXL, SMH, SOXQ, SOXX, XSD), High Beta (SPHB), Value (VLUE)

Consumer discretionary stocks: Ross Stores (ROST)

Financial stocks: Goldman Sachs (GS), Morgan Stanley (MS), Principal Financial (PFG)

Industrial stocks: Delta Air Lines (DAL), J.B. Hunt Transport Services (JBHT), Planet Labs (PL), Rocket Lab (RKLB)

Materials stocks: Nucor (NUE), Steel Dynamics (STLD)

Tech stocks: Apple (AAPL), Applied Materials (AMAT), Advanced Micro Devices (AMD), Arm (ARM), ASE Technology (ASX), AXT (AXTI), Cadence Design Systems (CDNS), Dell Technologies (DELL), F5 (FFIV), Himax Technologies (HIMX), Hewlett Packard Enterprise (HPE), Jabil (JBL), KLA (KLAC), Kulicke & Soffa (KLIC), Lam Research (LRCX), Lattice Semiconductor (LSCC), MKS Instruments (MKSI), Monolithic Power Systems (MPWR), Marvell Technology (MRVL), MACOM (MTSI), Micron (MU), MaxLinear (MXL), Navitas Semiconductor (NVTS), NXP Semiconductors (NXPI), ON Semiconductor (ON), SMART Global (PENG), Silicon Motion (SIMO), STMicroelectronics (STM), Seagate (STX), Tower Semiconductor (TSEM), Texas Instruments (TXN), United Microelectronics (UMC), Vishay Intertechnology (VSH), Western Digital (WDC)

Communication services stocks: Globalstar (GSAT), SiriusXM (SIRI)

The chip rally is starting the week with fresh momentum.

Micron (MU) opened at a record intraday high Tuesday, leading chips higher after UBS more than tripled its price target on the memory-chip maker to a Street-high $1,625.

UBS is not just raising numbers. It’s arguing that AI has changed how investors should value Micron.

The stock surged over 10% in early trading, notching its 30th intraday all-time high of the year, while the PHLX Semiconductor Index (^SOX) also hit an intraday record after the opening bell.

A $1,625 target implies roughly 115% upside from Friday’s close and a market cap near $1.8 trillion, according to Bloomberg — enough to make Micron the seventh-biggest US company, ahead of Tesla (TSLA), Meta (META), and Berkshire Hathaway (BRK-A, BRK-B).

The move spread across chip stocks, with Marvell (MRVL), AMD (AMD), Lam Research (LRCX), Qualcomm (QCOM), and ON Semiconductor (ON) gaining early. Keep an eye on $800: Hold above it, and Micron’s breakout stays alive.

Stocks started the week higher after markets were closed on Monday for Memorial Day. Sentiment was buoyed by hopes of progress on a peace deal between the US and Iran.

The Dow Jones Industrial Average (^DJI) climbed 0.3% at Tuesday’s open, while the S&P 500 (^GSPC) rose 0.5%. The tech-heavy Nasdaq Composite (^IXIC) led gains, rising 0.8%.

Oil prices whipsawed in early morning trading but held below $100 per barrel. Brent crude futures (BZ=F) fell 3% to $96 per barrel, while WTI crude futures (CL=F) declined 3.8% to $92 per barrel.

Gold (GC=F) was roughly flat, while bitcoin (BTC-USD) edged down to $76,725. The 10-year Treasury yield (^TNX) fell 7 basis points to 4.47%.

Home price growth is continuing to slow as high prices and elevated mortgage rates slow buying and selling activity.

The S&P Cotality Case-Shiller 20-City Composite Home Price Index, which measures home prices in 20 of the nation’s largest metropolitan areas, rose 0.83% in March from a year earlier, according to new data, down from a 0.9% annual increase in February.

Home prices are now falling in over half the country. Prices in Seattle saw the steepest year-over-year drop at 2.5%, followed by Denver, Tampa, Dallas, and Phoenix.

Housing markets in the Northeast and the Midwest are comparably stronger. Prices are up 6.1% year-over-year in Chicago, 4% in New York, and 3% in Cleveland.

On a monthly basis, home prices fell from February to March, “confirming that demand remains soft as we head into spring,” Nicholas Godec, head of fixed income tradables and commodities at S&P Dow Jones Indices, said in a statement.

ETF launches are taking off.

As Apollo’s chief economist Torsten Sløk pointed out in a new chart on Tuesday, the number of exchange-traded funds is now higher than the total number of US publicly listed companies. (Disclosure: Yahoo is a portfolio company of funds managed by affiliates of Apollo Global Management.)

“The number of publicly listed companies keeps declining, and there are now more ways to trade the market than there are stocks in the market,” Sløk said in a note.

The number of ETFs has doubled since 2020, according to JPMorgan. New strategy launches really took off after the Securities and Exchange Commission’s 2019 ETF rule change, which made it easier for issuers to bring new ETFs to market.

In April, Morningstar reported that US ETF flows hit $167.2 billion, nearly three times the amount of inflows a year ago, spurred by a rally in semiconductor and growth stocks.

AutoZone (AZO) stock fell 5% in premarket trading on Tuesday after the auto retailer’s first quarter revenue fell short of analyst estimates.

AutoZone reported earnings of $38.07 for the quarter, which surpassed Wall Street’s estimates of $36.22. But revenue of $4.84 billion missed estimates of $4.86 billion.

“Domestically, both DIY and Commercial sales grew impressively this past quarter, while our international sales, in constant currency, continued to be challenged as both Mexico and Brazil performed similarly to last quarter,” CEO Phil Daniele said. “While international performance has been below our plan, we believe our market share continues to grow as we outpace our competition in both international marketplaces.”

Oil prices pared some of their deeper losses on Tuesday morning after the US and Iran clashed near the Strait of Hormuz but still kept up appearances of progress on a peace deal.

Bloomberg reports:

The strikes came hours after US President Donald Trump reiterated that negotiations with Tehran to extend their ceasefire and reopen the strait were proceeding, and just before Iran’s Supreme Leader Mojtaba Khamenei published a statement warning that the “nations and lands of the region will no longer be a shield for American bases.”

There’s “a lot of talking back and forth” about “specific language in the initial document, so it’ll take a few days,” US Secretary of State Marco Rubio told reporters in India on Tuesday morning.

The US military said it conducted self-defense strikes in southern Iran, targeting missile-launch sites and boats attempting to lay mines, while the Islamic Revolutionary Guard Corps said it fired at an F-35 fighter jet and several drones after they entered Iranian airspace.

The IRGC claimed it shot down an unmanned MQ-9 Reaper drone and forced the other aircraft to flee. Several Iranian personnel were killed in the attacks on vessels near Larak Island in the Strait of Hormuz, Iran’s state-run Nour News reported, without providing further details. Israel’s military said it wasn’t part of the US operation.

Read more here.

Traders returned from the Memorial Day holiday with some optimism as the S&P 500 (^GSPC) ended last week above the 7,500 mark.

This week, markets have some semiconductor and retailer earnings to look forward to, as well as the Conference Board’s consumer confidence reading on Tuesday and the Fed’s preferred inflation gauge, the Personal Consumption Expenditures index, on Thursday.

Here’s today’s economic data and earnings calendar:

Tuesday: ADP weekly employment change, week ended May 9 (42,250 previously); Chicago Fed national activity index, April (-0.2 previously); Philadelphia Fed non-manufacturing activity, May (-16.5 previously); FHFA housing price index, month-on-month, March (0.0% previously); Conference Board consumer confidence, May (92.5 expected, 92.8 previously); Conference Board present situation (123.8 previously); Conference Board expectations, May (72.2 previously); Dallas Fed manufacturing activity, May (-2.3 previously)

Earnings calendar: AutoZone (AZO), Elbit Systems (ESLT), Zscaler (ZS), Pony AI (PONY)