U.S. stocks rebounded on Thursday, erasing the previous session's declines after a string of Federal Reserve signals that left investors reassessing the path for interest rates. The S&P 500 climbed 1.08% to finish at 7,500.58. The Nasdaq Composite rose 1.91% to 26,517.93, while the Dow Jones Industrial Average added 72 points, or 0.14%, to close at 51,564.70.
For the week, the major averages posted gains: the S&P 500 advanced 0.9%, the Nasdaq jumped 2.4%, and the Dow increased 0.7%.
Chip names drive the advance
Semiconductor stocks led the market higher, with Intel Corp. at the forefront after a prominent corporate announcement spurred a sharp move in the sector. Intel surged 10.6% on word of a partnership to design chips domestically with a large technology company. Other semiconductor shares also participated in the rally, helping power the Nasdaq's outperformance.
That momentum followed a midweek pullback that was sparked by the Federal Reserve's first policy meeting under new chairman Kevin Warsh. Investors had sold off after the Fed's meeting and subsequent materials nudged market expectations about future rate policy.
Fed signals and market reaction
The Fed’s updated projection, or dot plot, showed that nine of 18 officials now expect interest rates to rise in 2026. Adding to uncertainty, Chairman Warsh chose not to submit his own rate forecast. In public remarks he repeatedly emphasized the goal of "price stability," a tone markets interpreted as being on the dovish-to-hawkish spectrum and contributing to short-term volatility.
Despite the midweek turbulence tied to that policy meeting, the major indexes remain close to record highs. Two factors cited as underpinning that resilience are robust corporate earnings tied to increased artificial intelligence investment and market relief following a resolution in the Iran conflict.
Macro calendar and potential tests for the rally
Investors face a busy data slate that could influence near-term market direction. The Fed’s preferred inflation measure and a final reading on first-quarter GDP are both due this week. Market participants will use those reports as gauges of consumer health and the underlying pace of economic growth.
Against that backdrop, the sustainability of the AI-fueled rally is a central question for investors.
Micron earnings loom as a key milestone
Micron Technology’s quarterly report, due this week on Wednesday, is receiving particular scrutiny because the company is viewed as a bellwether for data center spending and memory-chip demand. Micron shares have surged nearly 300% so far this year, making the company one of the largest beneficiaries of the AI-driven investment cycle.
Traders and analysts will be watching the results for evidence that data center investment is sustainable and that semiconductor profit margins can remain robust. Strong numbers from Micron - and any commentary pointing to ongoing capital expenditure in data centers - could bolster confidence that the market’s advance has further room to run.
What strategists are saying
Market strategists provided a range of perspectives on the outlook for U.S. equities, with several firms noting upside potential alongside near-term vulnerabilities tied to policy and geopolitical developments.
Wolfe Research: "We remain bullish, especially on Technology, and more specifically on Semis. Our sense is that markets will likely work their way higher over the summer as optimism over falling oil prices eases pressure on the low-end consumer and the U.S. economy powers ahead. However, with a deal now reached between the U.S. and Iran, downside risks still lurk. More specifically, we now see lack of progress on talks between the two sides or a restart in the conflict as key downside catalysts for the market. However, our sense is that any downside in markets will likely be bought quickly by retail investors as long as fund flows continue their record pace."
Morgan Stanley: "We continue to view the Warsh nomination and subsequent appointment as a market-stabilizing event even if it leads to some short-term turbulence. Last Wednesday’s price action suggests that transition is off to a good start, but could be a bit messy for stocks in the short term alongside the initial reaction of a sharp bear flattening of the yield curve, a stronger dollar and weak precious metal prices."
"We think liquidity conditions are tightening and may remain a headwind for stocks into July, especially if markets test the Fed’s newfound resolve."
RBC Capital Markets: "We remain constructive on the U.S. equity market outlook in the year ahead with a 7,900 12- month S&P 500 price target, but have not believed that the path higher for stocks would necessarily be a linear one. Last week’s Fed meeting keeps us vigilant for a potential short-term pullback in U.S. equities driven by increased indigestion around the interest rate/Fed outlook, and recent Middle East developments remind us that the geopolitical backdrop is likely to remain a risk factor in the U.S. equity outlook for some time to come. Still, as long as recession concerns remain low, and expectations for Fed hikes/ interest rate increases remain moderate, we expect pullbacks in the S&P 500 to stay contained in the 5-10% range."
JPMorgan: "Some of the consumer sub-sectors are trying to form a bottom, trading off lows in the past weeks. Consumer was in the eye of the storm for a while, but we think better performance for the parts of the group can continue in 2H."
Evercore ISI: "The surge since 3/30 is being catalyzed by capital markets, cooling geopolitics and rising speculation. Equity issuance, even when including Generational IPOs ahead, remains below levels indicating major tops, highlighting more upside ahead."
Investor takeaways
Thursday’s rebound underscored the market’s responsiveness to corporate developments in cyclical sectors such as semiconductors, while also highlighting sensitivity to policy signals from the Federal Reserve. With Micron’s earnings and pivotal macro releases on the calendar, traders will be watching closely for confirmation that the AI investment theme and broader economic momentum can support current valuations.
Given the mix of strong corporate earnings, Fed uncertainty and geopolitical considerations, market participants face a landscape that could produce further upside as well as intermittent pullbacks.