Thursday’s U.S. equity session was shaped by a clear rotation away from geopolitical risk pricing and back into the AI chip trade. The U.S.-Iran interim agreement was formally signed in Geneva, and three Saudi supertankers crossed the Strait of Hormuz on the same day. That development reduced the geopolitical premium that had recently supported oil and energy stocks. At the same time, the market shifted its main focus back to AI semiconductors, with the Philadelphia Semiconductor Index rising more than 6% in a single session and setting another record high.
The geopolitical news also offset part of the shock from the hawkish FOMC message. The S&P 500 and the Nasdaq reversed two consecutive losing sessions, while the Dow posted another record close, its third record-setting session of the week. Energy shares fell alongside crude prices and became the only major losing sector of the day.
High-beta stocks led the rebound
The S&P 500 gained 1.08% to 7,500.58. The Nasdaq rose 1.91% to 26,517.93. The Dow added only 0.14% to 51,564.70, while the Russell 2000 led the major indexes with a 2.12% advance to 2,979.77. The pattern of gains moved from small caps to large caps in descending order, and the Dow was nearly flat compared with the broader rebound. That showed the rally was driven mainly by high-beta names that had been hit hardest in the previous two sessions, while defensive and blue-chip shares did not participate to the same degree.
The U.S.-Iran development had already been priced in before the opening bell, and the indexes moved steadily higher through the day. By the close, they had recovered most of the losses caused by the previous day’s FOMC reaction.
Before the market opened, Trump confirmed on Truth Social that Apple and Intel had reached a design and foundry cooperation agreement. Under the arrangement described in the post, Intel will initially take on mature-process chips for iPads and older iPhone models, while Apple’s flagship products will still be supplied by TSMC. The negotiations had been underway for more than a year. For Intel, the agreement brings a major external customer to its foundry business. For Apple, it diversifies dependence on TSMC. Neither company had issued a formal response, and the market was pricing the directional significance of the cooperation.
Intel, memory stocks and Nvidia lifted the chip chain
The same Truth Social post also said Nvidia had agreed to produce its first chips at Intel, and that Musk had committed to jointly building TerraFab, described in the source as the largest wafer fab in history. The Apple cooperation became the third piece of Intel’s foundry map. Intel closed up about 10.5% at $133.82.
Memory and storage names also rallied. Apple is preparing to raise prices because of rising memory and storage chip costs. SanDisk climbed more than 11%, and Micron rose nearly 9%, lifting the broader storage supply chain. Nvidia gained nearly 3%. With the Philadelphia Semiconductor Index up more than 6% to a new record, the rally extended across equipment, memory and computing power. The market continued to trade the long-term AI capital spending theme even after the hawkish dot plot had landed.
SpaceX moved in the opposite direction. The stock fell 3.56% to $185.00, marking its second straight daily decline and bringing the two-day drop to about 8.3%. Bloomberg reported that the company was preparing to issue at least $20 billion in investment-grade dollar bonds to repay bridge loans due in 2027. Concerns over equity dilution, combined with the FOMC-related hawkish shock, created the two pressures behind the consecutive declines. The stock was still up nearly 15% for the week and 37% above its IPO-day issue price, but short-term pressure had not disappeared.
Energy lost ground as the Hormuz premium faded
Energy was the worst-performing group among the 11 S&P sectors. WTI crude fell about 2% on the day to $74.29 per barrel, reaching its lowest level in nearly three months. Exxon Mobil and Chevron both declined, and the Dow Jones Transportation Average dropped more than 4%. With the Strait of Hormuz reopened, the geopolitical premium that had supported oil and energy shares was released. Earlier year-to-date gains of 20% to 40% began to loosen, and energy moved from the week’s biggest winner to the biggest loser.
Technology, consumer discretionary and industrials led the market higher. Capital moved out of defensive areas and energy and back toward the computing-power chain. Money that had left technology shares after the FOMC shock on the previous day partly returned once the geopolitical catalyst was in place.
Volatility cooled while crypto showed limited reaction
In macro markets, the VIX fell 11.06% to 16.40. The fear sparked by the FOMC decision largely faded within one session. The 10-year Treasury yield eased slightly to around 4.445%, while the 2-year yield stayed above 4.18%. The market did not remove pricing for a September rate hike; improved risk appetite simply compressed volatility for the time being. Gold dropped to $4,210 per ounce, silver also moved lower, and the U.S. dollar index eased slightly while remaining at a high level.
Crypto assets showed limited response to the geopolitical relief. According to CoinGecko, Bitcoin closed near $64,026, and Ethereum closed near $1,734. The pressure from hawkish rate expectations had not been removed. WTI crude finished at $74.29 per barrel, marking a near three-month low.
Next week’s calendar includes PCE data, Flash PMI and Micron’s earnings. Micron’s guidance is treated in the source as one of the most direct indicators for AI computing demand. In the previous quarter, guidance that came in below expectations dragged the entire semiconductor sector sharply lower in a single session. Russell Reconstitution will take effect at next Friday’s close, and mechanical rebalancing flows will significantly increase trading volume. Small-cap volatility is set to rise at that time, according to the source.
The session’s rebound had two legs: the U.S.-Iran agreement released the geopolitical premium, and chip stocks used actual price gains to confirm that the AI theme was still active. The two forces have different durations. The geopolitical premium was a one-time release after the agreement was signed, while the chip rally had broader supply-chain participation through Intel, SanDisk and Micron. SpaceX also introduced a new variable: if the $20 billion bond issuance is completed, financing pressure and dilution expectations will continue to weigh on the stock rather than remain a simple valuation adjustment.