Stocks gapped up at the opening bell on Thursday and ended a holiday-shortened week on an upbeat note after the U.S. and Iran reached an agreement that opens the Strait of Hormuz on a provisional basis for 60 days.
The prospect of peace in the Middle East and relief from an energy shock revived animal spirits dulled by Federal Reserve Chair Kevin Warsh’s hints of higher interest rates during the press conference after the first Fed meeting of his tenure.
By the time the closing bell rang, the blue-chip Dow Jones Industrial Average was up 0.1% for the day and 0.7% for the week at 51,565, good enough for another new all-time weekly closing high.
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The S&P 500 had added 1.1% at 7,500, bringing the broad-based index to a 0.9% gain for the week. The tech-heavy Nasdaq Composite was up 1.9% on Thursday and 2.4% for the four days at 26,517.
The front-month West Texas Intermediate crude oil futures contract declined by 0.4% to $75.71 per barrel. WTI was down more than 10% this week and is now just 13% above its closing price on February 27, the day before the war in the Middle East began.
The 2-year Treasury yield ticked up to 4.177% from 4.163% on Wednesday. This market-based barometer of short-term interest rates hit a 52-week high on Thursday.
Following its two-day meeting this week, the Fed held the federal funds rate steady at 3.50% to 3.75%. Its short statement concluded with a firm commitment to the inflation half of its dual mandate: “The Committee will deliver price stability.”
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As Louis Navellier of Navellier & Associates notes, Warsh “was perceived as more hawkish than hoped for” during his first (and maybe last) FOMC press conference.
“The commentary Warsh gave made it clear that, currently, unless inflation falls much closer to the 2% target, which he made clear would not be changed, a rate hike was likely by year’s end,” Navellier concludes.
You can catch up on news and developments around the FOMC meeting at our June Fed meeting blog.
Apple and Intel are making a deal
“Apple has agreed to work with Intel to design and build its Chips in America,” Trump said in a lengthy post on Truth Social. “The Technology the World relies on was invented in America,” he began. “We all remember ‘Intel Inside.'”
Indeed, we do, and the president wants to undo the work of his predecessors who allowed “Taiwan and others [to] steal our Semiconductor Factories” and “forgot to protect our Industries with TARIFFS.”
Neither Intel nor Apple confirmed the president’s post, though The Wall Street Journal reported on May 8 that the companies had reached a preliminary chipmaking agreement.
Elsewhere in an otherwise rapidly expanding tech universe, SpaceX (SPCX, -3.6%) posted a second straight down day amid the afterburn from the biggest IPO ever.
Big Blue has no bounce
International Business Machines (IBM, -5.1%) was the worst-performing Dow Jones stock on Thursday, sliding along with Accenture (ACN, -16.3%) after the fellow IT services provider shared worse-than-expected top-line guidance for its full fiscal year, citing operating conditions in the Middle East.
CEO Julie Sweet said during the tech stock’s conference call that the war was impacting spending plans for many of its clients. Management also noted market concerns about the impact of artificial intelligence (AI) on its business.
Accenture now expects to see revenue growth of 3% to 4%, down from an estimate of 3% to 5% in March. ACN stock had its worst day on record on Thursday.
