U.S. stocks returned from the Memorial Day holiday to a sharply divided session on Tuesday. The S&P 500 and Nasdaq Composite both closed at fresh all-time highs, powered by a massive rally in semiconductor stocks, while the Dow Jones Industrial Average slipped as old-line blue chips failed to keep pace. Falling oil prices and a drop in Treasury yields helped set a risk-on tone after President Trump signaled progress in Iran peace talks over the weekend, but stretched valuations in the AI trade kept some investors cautious.
What Moved Markets
The S&P 500 rose 45.65 points, or 0.61%, to close at a record 7,519.12. The Nasdaq Composite jumped 1.19% to finish at 26,656.18, also a new all-time high. The Dow Jones Industrial Average, however, fell 118.02 points, or 0.23%, to close at 50,461.68, weighed down by weakness in non-tech components.
Treasury yields declined across the curve as bond markets digested renewed optimism around a Middle East peace deal alongside fresh U.S. military strikes on Iranian targets that officials described as defensive. The 10-year yield fell more than 8 basis points to 4.485%, while the 2-year dropped 7 basis points to 4.057%. Oil prices tumbled more than 5% in early trading on the prospect of eased tensions with Iran, taking pressure off inflation expectations and giving equities room to run. The combination of lower yields and cheaper crude was particularly supportive of growth and travel names.
Notable Movers
Micron Technology (MU) was the undisputed star of the session, surging 19.3% and pushing its market capitalization past the $1 trillion mark. The rally came after UBS analyst Timothy Arcuri more than tripled his price target on the stock, citing long-term AI-driven demand for memory chips. President Trump also praised the company at a weekend rally for its domestic investment commitments. Micron’s shares have now more than tripled in 2026 alone.
The semiconductor rally was broad-based. The VanEck Semiconductor ETF (SMH) gained more than 3%, with ON Semiconductor (ON) and Western Digital (WDC) each adding roughly 9% and Advanced Micro Devices (AMD) rising 6%. Taiwan Semiconductor Manufacturing (TSM) climbed 1.8%.
Travel stocks also caught a bid on falling oil prices and easing geopolitical fears. United Airlines (UAL) jumped 5% and Carnival Corp. (CCL) rose 2.6% as cheaper fuel costs and optimism over Iran peace talks lifted the group.
On the downside, AutoZone (AZO) plunged 9% after the automotive parts retailer reported third-quarter revenue of $4.84 billion that missed Wall Street’s $4.87 billion estimate. Weakness in international markets, particularly Mexico and Brazil, offset a solid 5.5% rise in same-store sales. Gross margins also contracted, compounding investor disappointment. The drop marked AutoZone’s worst single-day decline since May 2022.
Looking Ahead
The divergence between the tech-heavy Nasdaq and the Dow underscores how concentrated the current rally has become. Micron’s move past a trillion-dollar valuation has some analysts drawing bubble comparisons, while others point to the ongoing strength in AI spending as fundamental support. Investors this week will be watching for further developments in U.S.-Iran negotiations, additional economic data releases, and any signals from new Fed Chair Kevin Warsh’s team on the inflation outlook. With the S&P 500 at record highs and Q1 earnings growth tracking above 15%, the market’s uptrend remains intact — but the narrowing leadership and historically stretched valuations suggest caution is warranted heading into the summer months.