Wall Street headed into the final session of the second quarter on Tuesday with the S&P 500 on track for its strongest three-month stretch since 2020, a rally built on the artificial-intelligence spending boom and a sharp drop in oil prices after the U.S.-Iran ceasefire. The shift in mood traces back to the weekend, when President Donald Trump said peace talks with Iran would resume Tuesday, easing the war fears that had gripped markets since fighting began February 28.

The numbers tell the story. The S&P 500 has climbed about 14% since the start of April. The Nasdaq Composite has done even better, up roughly 20% for the quarter and now home to SpaceX, the $2 trillion rocket company that joined its ranks in June. The Dow Jones Industrial Average is set for its best quarter since 2022.

On Monday, the Dow rose 307 points, or 0.59%, to a record 52,183. The S&P 500 gained 1.2% and the Nasdaq 100 jumped 2.3%. Much of that was a relief rally after a brutal stretch for chip stocks, and it carried into Tuesday, when the S&P 500 edged up 0.2% in early trading.

The gains came despite a Federal Reserve that has turned noticeably tougher on inflation. New Chairman Kevin Warsh, who took over in May, has dropped the central bank’s habit of telling markets where rates are headed and has stuck to a single message: the Fed will get inflation back to 2%. Consumer prices rose at a 4.2% annual rate in May, the highest in three years, pushed up mostly by gasoline during the Iran war.

Market movers

The biggest single name this quarter has been Micron Technology, the memory-chip maker. The company reported adjusted earnings of $25.11 a share last week, far above the $20.78 analysts had expected, and the stock jumped 17% on the news. Memory chips, once treated as a low-margin commodity, have become one of the hottest corners of the AI trade.

Alphabet, Google’s parent, had a notable week of its own. The company replaced Verizon in the Dow and climbed 5% on its first day in the blue-chip index, a sign of how far technology has pushed into a benchmark once dominated by industrial names. Tesla soared 8.5% on Monday, while Amazon rose 3.2%, Meta Platforms gained 2.2% and Nvidia added 1.3%.

Not every name shared in the gains. Apple fell 6% last week after raising prices on its MacBook and iPad lines. Nike, which reports earnings Tuesday after the close, has dropped 24% over the quarter, and analysts expect its sales to fall about 2% from a year ago. In health care, Germany’s Merck agreed to buy Bio-Techne for $73 a share, or $11.3 billion.

Strategists are split on what comes next. Brian Levitt, chief global market strategist at Invesco, said technology stocks went through a period of June gloom that could reverse as earnings season opens in July. Guy Miller, chief market strategist at Zurich Insurance Group, pointed to a bigger change: the easy-money support investors counted on at the start of the year is gone, replaced by talk of rate hikes. Bank of America now expects the Fed to raise rates three times this year.

Commodities and volatility

Oil has been the quarter’s quiet hero for consumers. Brent crude settled near $74 a barrel last week and U.S. West Texas Intermediate near $70, both down about 20% over the three months as the Strait of Hormuz gradually reopened and the U.S.-Iran ceasefire held. That decline has started to pull gasoline prices lower and take some pressure off household budgets.

Gold went the other way. The metal slipped below $4,000 an ounce to a seven-month low, hurt by the stronger dollar and the prospect of higher interest rates, which make gold less attractive to hold. The U.S. dollar is heading for its fourth straight quarterly gain, and the Japanese yen has sunk to its weakest level since 1986. The VIX, Wall Street’s fear gauge, sat near 18, well below the 30-plus readings seen during the worst of the Iran fighting in March.

Investors now turn to two events. Warsh speaks Wednesday at the European Central Bank’s forum in Sintra, Portugal, his first appearance abroad as Fed chair, alongside ECB President Christine Lagarde and other central bankers. Then comes Thursday’s June jobs report, which will shape bets on whether the Fed raises rates as soon as October. For now, the quarter ends on a high note, with cheaper fuel and a booming AI sector outweighing the worry about what the Fed does next.

JBizNews Desk | New York
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