The Nasdaq Composite and the S&P 500 climbed to new peaks and oil prices tumbled on Wednesday following reports about the US and Iran nearing a potential peace agreement.
The Nasdaq Composite rose 2% to 25,838.9, while the S&P 500 advanced 1.5% to 7,365.1, recording their highest close ever and biggest one-day percentage gains since April 8. The Dow Jones Industrial Average gained 1.2% to settle at 49,910.6.
Barring energy and utilities, all sectors ended in the green, led by industrials and technology, which gained 2.6% each.
West Texas Intermediate crude was last down 6.9% at $95.20 per barrel, while Brent slumped 7.7% to $101.40.
American and Iranian officials are close to a one-page memorandum of understanding to end the war and establish a framework for nuclear negotiations, Axios reported Wednesday, citing sources.
"A deal announcement would move futures further immediately, in fact even the potential of a deal is already triggering a decline in oil prices," Rystad Energy Chief Oil Analyst Paola Rodriguez-Masiu said in remarks emailed to.
The physical market's recovery won't be as quick as the futures market predicts, Rodriguez-Masiu said, pointing to a six-to-eight-week lag between the strait reopening and oil flows normalizing.
US President Donald Trump said the US has had "very good talks" with Iran over the past 24 hours, but there is no deadline on when he expects Tehran to respond to a US proposal to end the war, CNN reported.
Trump warned that Iran's failure to agree to a deal would trigger a powerful military operation, according to his social media post from earlier in the day.
Iran said it was reviewing the latest US proposal, according to news reports.
US Treasury yields were lower, with the 10-year rate down 7.8 basis points at 4.35% and the two-year rate falling 7.4 basis points to 3.88%.
In company news, Advanced Micro Devices (AMD) shares surged nearly 19%, among the best performers on the S&P 500.
Late Tuesday, the chipmaker reported stronger-than-expected first-quarter results as demand for artificial intelligence infrastructure pushed data center revenue higher year over year.
Advanced Micro Devices is expected to capture about half of the total addressable market for server central processing units, which the company expects will exceed $120 billion by 2030, BofA Securities said.
Walt Disney's (DIS) fiscal second-quarter results came in ahead of market estimates Wednesday amid revenue gains across all business operations, while the media and entertainment giant reiterated its expectations for growth to accelerate in the second half. Disney's shares climbed 7.5%, the top performer on the Dow.
Nvidia (NVDA) followed Disney on the Dow, up 5.8%. Specialty glass maker Corning (GLW) will boost its optical connectivity manufacturing capacity under a multiyear partnership with the chipmaking giant to support AI factory buildouts. Corning shares jumped 12%.
Arista Networks (ANET) shares tumbled nearly 14%, among the worst S&P 500 performers. Late Tuesday, the cloud networking company issued a second-quarter revenue outlook slightly below market estimates.
In economic news, employment in the US private sector grew at its fastest pace in more than a year in April, ADP (ADP) data showed.
"The uptick in private payroll gains from the ADP employment report not only suggests a stable labor market, but one that was potentially warming despite the outbreak of the war in Iran," Oxford Economics said in a note. "If this signal is echoed in the official measure on Friday, the unemployment rate is likely to fall given the low break-even rate, which we estimate is near zero."
Data from the Bureau of Labor Statistics are expected to show Friday that the US economy added 65,000 nonfarm jobs last month, which would represent a fall from a 178,000 increase reported for March, according to a Bloomberg-compiled survey. The unemployment rate is seen unchanged at 4.3%.
St. Louis Fed President Alberto Musalem said Wednesday that risks have shifted toward higher inflation.
"We have risks both on the employment side and on the inflation side," Musalem said at a Mississippi Bankers Association event, according to a Reuters report. "In my understanding risks have been shifting towards ... the inflation side."
Gold rose 3.1% to $4,708.50 per troy ounce, while silver climbed 6.1% to $78.05 per ounce.