Stocks climb on chips, Brent gains on Iran deal doubts
Market Overview and Key Drivers
By Caroline Valetkevitch
NEW YORK, June 18 (Reuters) - Major stock indexes climbed on Thursday as semiconductor shares jumped, while Brent oil touched its lowest level in weeks before finishing slightly higher.
Oil Markets and Middle East Developments
An interim deal between the United States and Iran to end the Middle East war took effect, and oil tankers sailed through the Strait of Hormuz, pointing to a resumption of long restricted energy flows.
U.S. Vice President JD Vance, however, warned Israel against further attacks on Iran-backed Hezbollah in Lebanon, raising doubts about the durability of the U.S.-Iran ceasefire agreement.
Brent and WTI Performance
Brent crude futures gained 30 cents, or 0.38%, to settle at $79.85 a barrel after sliding as low as $76.54 earlier in the session. U.S. West Texas Intermediate fell 19 cents or 0.25% to finish at $76.60 a barrel.
Regional Impact
Europe is more vulnerable to an increase in inflation from higher oil prices than the United States.
Currency and Federal Reserve Moves
The U.S. dollar index hit a one-year high after a hawkish tilt by the Federal Reserve on Wednesday raised bets on rate increases this year.
Stock Market Performance
The Nasdaq gained 1.9% and led gains on Wall Street, while the Philadelphia semiconductor index rose 6.4%.
Semiconductor Surge
U.S. President Donald Trump said iPhone maker Apple had agreed to work with Intel to design and manufacture its chips in the U.S.. Intel shares jumped 10.6%.
Market Sentiment
Peter Cardillo, chief market economist at Spartan Capital Securities in New York, noted the rebound in stocks from a day earlier.
"The reason for the optimism was Trump and the president of Iran signed the memorandum and oil prices fell," he said, adding: "There is enthusiasm that after 60 days a more solid deal will come to fruition and, by that time, hopefully the low supply factor in the oil market will be reversed."
DOLLAR FIRM
Major Indexes
The Dow Jones Industrial Average rose 72.15 points, or 0.14%, to 51,564.70, the S&P 500 rose 80.48 points, or 1.08%, to 7,500.58 and the Nasdaq Composite rose 496.28 points, or 1.91%, to 26,517.93.
Weekly Performance
With the market closed on Friday for the Juneteenth holiday marking the emancipation of enslaved Black Americans, the S&P 500 showed a 0.93% weekly gain compared with the Nasdaq's 2.43% advance and the Dow's 0.71% increase.
MSCI's gauge of stocks across the globe rose 6.48 points, or 0.58%, to 1,127.60.
The pan-European STOXX 600 index fell 0.34%.
Currency Markets
In foreign exchange, the dollar index, which measures the greenback against a basket of currencies including the yen, euro and sterling, rose 0.45% to 100.80, the highest level since May 2025. It surged 0.85% the previous session, its biggest single-day jump in over three months.
Central Bank Actions
The U.S. central bank on Wednesday held rates steady in a 3.50% to 3.75% range as Kevin Warsh took charge with a sweeping policy review. The Fed funds futures market is pricing in 68% odds of a rate hike by September, LSEG data shows.
Yen and Sterling Movements
The Japanese yen weakened as far as 161.45 per dollar, its lowest since July 2024, wiping out gains made after Tokyo's intervention on April 30. A break above the currency pair's 2024 high of 161.99 would send the yen to its weakest level since 1986.
Sterling fell 0.62% to $1.3206 after the Bank of England left interest rates unchanged.
Bond and Commodity Markets
U.S. Treasury yields fell after rising the day before. The two-year yield, the most sensitive to Fed rate-change expectations, was down 1 basis point on Thursday at 4.153%, after rising as high as 4.207% on Wednesday. The 10-year yield was down 3 basis points at 4.437%.
U.S. gold futures fell 3.1% to settle at $4,245.9.
(Reporting by Caroline Valetkevitch in New York; additional reporting by Sinéad Carew in New York, Amanda Cooper in London, Satoshi Sugiyama in Tokyo; Editing by Elaine Hardcastle, Kirsten Donovan)
