Wall Street bounced back Thursday, with the Dow Jones Industrial Average climbing 261 points as investors shook off the previous session’s hawkish Federal Reserve shock and rallied behind a surprise announcement that Intel and Apple would partner to design and manufacture semiconductors on American soil — a development that sent chip stocks surging across the board and renewed confidence in the domestic technology sector.
The Dow closed at 51,753.90, a gain of 261.35 points, or roughly 0.51%, recovering a portion of the steep losses from Wednesday when the 30-stock index had shed more than 507 points after the Fed’s updated projections rattled markets. The S&P 500 gained 1.15% while the Nasdaq surged 1.5%, as investors focused on the Fed’s latest interest-rate decision and the signing of the interim U.S.-Iran peace deal. The Russell 2000 small-cap index, however, lagged the broader rally, losing 0.72%.
The Intel-Apple Announcement
The single biggest catalyst driving Thursday’s gains was a post on Truth Social by President Donald Trump, who announced that Intel had agreed to partner with Apple to design and build chips in the United States — a development framed by the White House as a victory for domestic manufacturing policy.
Intel’s stock rose 9% in premarket trading after Trump said the semiconductor company had agreed to a deal with Apple to design and build chips in the U.S. “Stupid Presidents took our Economy for granted, and let Taiwan and others steal our Semiconductor Factories,” Trump said in a post on Truth Social. “Apple has agreed to work with Intel to design and build its Chips in America.”
Intel’s stock has seen significant gains recently after struggling for years, having relinquished its dominant market position. The stock has surged 464% in the past 12 months, with the company hitting a market cap of $608.7 billion.
The announcement rippled through the semiconductor sector. Chip stocks surged in premarket trading, led by Intel, which rose 9.8%, while Micron Technology gained 4.8%, Advanced Micro Devices rose 3.9%, and Broadcom advanced 3%. The iShares Semiconductor ETF rose 4.6%.
Iran Peace Deal Adds Tailwind
Adding to the bullish mood was the formalization of a U.S.-Iran interim peace agreement that investors had been tracking anxiously for weeks. The U.S. and Iran signed a 14-point memorandum of understanding to extend the ceasefire, including in Lebanon, and reopen the strategically vital Strait of Hormuz. The agreement calls for both sides to continue talks toward a final deal over the next 60 days and includes a $300 billion reconstruction plan for Iran, as well as the removal of all types of U.S. sanctions against the Islamic Republic.
President Trump defended the agreement against critics on Thursday. “These fools, who think I haven’t been tough enough on Iran, when the stock market just hit a record high and oil prices are ‘tumbling’ down, are either jealous, bad people, or stupid,” Trump said Thursday on Truth Social.
The reopening of the Strait of Hormuz — a critical chokepoint for global oil shipments — pushed crude prices lower and eased inflation fears that had been a central driver of market volatility in recent weeks. Lower oil prices reduce cost pressures throughout the economy and can lessen the urgency for the Federal Reserve to pursue rate hikes.
Wednesday’s Fed Shock Still Echoing
Thursday’s gains came against the backdrop of significant unease generated just 24 hours earlier. Stocks fell on Wednesday, while Treasury yields surged, as investors grew uncertain over the path of monetary policy after several Federal Reserve officials indicated there could be a rate hike this year to tamp down on inflation.
At the conclusion of the Fed’s two-day meeting, the first under new Chairman Kevin Warsh, the central bank left interest rates unchanged at a target range of 3.5% to 3.75%. A number of Fed officials see rates increasing in 2026, according to the summary of economic projections. The fed funds rate’s median estimate for year-end now stands at 3.8%, an increase from 3.4% in the prior projections from March, which suggests that the committee sees at least one rate hike as necessary in 2026. Warsh revealed he abstained from submitting a projection himself, further complicating the outlook.
“The market reaction at this point is largely to the dot plot being much more hawkish,” said Claudia Sahm, chief economist at New Century Advisors. “The wind has changed a lot in terms of the inflation picture.”
The previous dot plot, in March, showed a rate cut expected sometime this year, a projection that the Fed’s latest guidance effectively discarded. The shift caught many equity investors off guard and triggered broad selling across technology and growth stocks.
A Market Navigating Multiple Crosscurrents
Thursday’s rebound illustrated the degree to which Wall Street is simultaneously processing several major macro forces — geopolitics, monetary policy, and a technology sector in the midst of a historic AI-driven reshaping.
Retail sales surged in May despite the war, up 0.9% from April versus expectations of 0.5%, reinforcing impressions of a solid economy. That data, released Wednesday, was interpreted as a double-edged signal: strong consumer spending is positive for corporate earnings but also gives the Fed more justification for tighter monetary policy.
The Roundhill Magnificent Seven ETF, which tracks an equal-weight basket of mega-cap technology stocks including Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla, gained 0.43% to $64.86 in premarket trading.
The broader semiconductor rally on Thursday also represented a partial recovery from one of the sector’s most painful stretches of the year. Earlier this month, a weaker-than-expected AI chip outlook from Broadcom triggered a chain reaction that dragged down Micron, AMD, and Intel and contributed to a broader tech selloff. The Nasdaq Composite fell 4.18% on June 5 in its worst single-day decline since April 2025, while the S&P 500 snapped a nine-week winning streak.
Looking Ahead
The question now facing investors is whether Thursday’s rebound represents a durable shift in sentiment or a relief rally built on headlines. The Iran peace deal, while officially signed, remains conditional — with both sides committed to 60 days of further negotiations toward a permanent agreement. Any breakdown in those talks could quickly reverse the oil price declines that helped fuel Thursday’s optimism.
On the monetary policy front, the Fed’s hawkish dot plot has now recalibrated market expectations for the remainder of 2026. Traders are now fully pricing in a rate hike from the central bank by the end of the year, even as President Trump continues to call for cuts as Kevin Warsh, his appointee to chair the Fed, takes the helm.
For now, the combination of a landmark domestic chip manufacturing deal, declining oil prices, and a formalized Middle East ceasefire gave markets enough of a foundation to stage a meaningful recovery — and push the Dow back above 51,700 for the first time since the Fed’s warning rippled through trading floors on Wednesday afternoon.
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