US stocks rebound as oil prices ease despite renewed Middle East tensions; AI chip rally boosts markets

Wall Street recovered with gains led by AI chipmakers, while oil prices retreated as investors weighed the Iran conflict. Falling Treasury yields also supported markets despite ongoing geopolitical uncertainty.

Stocks rose and oil prices eased Thursday as financial markets calmed in the wait to see what will come next after President Donald Trump raised doubts about the temporary truce in the war with Iran.

The S&P 500 climbed 0.8% and more than recovered its loss from the day before, even though the United States launched new airstrikes against Iran which responded by targeting U.S. allies in the Middle East. The Dow Jones Industrial Average added 139 points, or 0.3%, and the Nasdaq composite rallied 1.3%.

In the oil market, prices gave back much of their jumps from the day before. The price for a barrel of Brent crude, the international standard, fell 2.2% to $76.30. That?s down from $78.02 the day before though still above its $71.80 price from the end of last week.

The worry is that a return to full-blown war will block oil tankers from the Strait of Hormuz and prevent the delivery of crude from the Persian Gulf to customers worldwide. That could worsen inflation which economists expected would ease with oil prices, and in turn force the Federal Reserve and other central banks to raise interest rates. Higher rates can keep a lid on inflation but they also slow the economy and hurt prices for all kinds of investments. The swings for oil prices halted what had been a steady decline in gasoline prices, and the cost for a gallon climbed a nickel overnight, according to motor club AAA. The average price for a gallon of regular gasoline was $3.85 Thursday, up 68 cents from a year earlier.

Renewed strength for makers of computer chips and other winners of the boom around artificial-intelligence technology helped to support stock markets worldwide. In South Korea whose stock market is dominated by two companies that make semiconductors, the Kospi index rose 0.6% after tumbling 5.3% the day before. SK Hynix, which is preparing to sell shares of its stock that will trade in the United States, jumped 5.3% in Seoul.

Micron Technology?s climb of 4.5% was one of the strongest forces lifting the S&P 500. Micron cited ?surging demand for memory in the AI era? as it gave a progress update on construction in central New York of what it says is the largest semiconductor manufacturing site in U.S. history. PepsiCo fell 3.3% even though it reported slightly better revenue for the latest quarter than analysts expected. Numbers released by the company behind Gatorade and Doritos showed weakening trends in its North American food and drinks businesses.

In stock markets abroad, indexes rose across much of Europe and Asia. Besides Seoul?s climb, stock indexes rose 1.7% in Shanghai and 0.9% in Paris. On the losing end was Hong Kong?s Hang Seng, which slipped 0.7% as shares of Apple supplier Luxshare fell 1.5% in its trading debut.

Stocks broadly got some help from falling yields in the bond market. The yield on the 10-year Treasury fell to 4.54% from 4.56% late Wednesday.

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