Dow rises 139 points as chip stocks rally despite renewed US-Iran strikes

US stocks closed higher on Thursday as a rally in semiconductor shares offset concerns over renewed military exchanges between the United States and Iran, while easing oil prices helped support broader market sentiment.

The Dow Jones Industrial Average added 139.02 points, or 0.27%, to finish at 52,487.41. The Nasdaq Composite gained 1.30% to close at 26,206.89, while the S&P 500 rose 0.81% to 7,543.65.

Chip stocks lead market higher

Semiconductor shares powered the market higher, with the VanEck Semiconductor ETF climbing 2.5%.

Micron Technology gained 4.5% after outlining plans to invest more than $250 billion in the United States through 2035 to expand memory chip production and support growing demand driven by artificial intelligence.

Applied Materials and SanDisk also posted strong gains, with SanDisk rising 7.6%.

Meta Platforms added to the positive sentiment after Reuters reported that the company plans to begin manufacturing its in-house AI chip in September.

The Philadelphia Semiconductor Index extended its recent advance as investors continued to back AI-related companies despite recent volatility across the sector.

With the second-quarter earnings season set to begin, analysts expect S&P 500 companies to report average year-over-year earnings growth of 24%, according to LSEG I/B/E/S.

Technology companies are projected to account for a significant share of that increase. Meanwhile, the S&P 500 is trading at about 20 times forward earnings, down from roughly 21 times a month ago.

Markets weigh geopolitical tensions and oil prices

Investor sentiment remained cautious after the US launched another round of strikes on Iran for the second consecutive day, according to US Central Command.

The latest attacks followed Tehran's strikes on commercial shipping around the Strait of Hormuz, slowing traffic through one of the world's most important energy shipping routes.

Despite the renewed conflict, crude oil prices declined after President Donald Trump said Iran had called to make a deal.

Reports also indicated that Qatar and Pakistan were attempting to facilitate renewed negotiations between the two sides.

The latest comments contrasted with Trump's remarks a day earlier, when he said the ceasefire with Iran was "over" and suggested he was no longer interested in pursuing negotiations.

European markets also recovered, with the pan-European Stoxx 600 index rising 0.8%.

In Asia, Japan's Nikkei 225 gained 1.4%, South Korea's Kospi added 0.62%, Hong Kong's Hang Seng fell 0.5%, and China's CSI 300 climbed 2.5%.

Fed outlook remains in focus

Investors also assessed the outlook for inflation and US monetary policy.

Fresh economic data showed weekly US jobless claims declined, suggesting the labour market remains stable despite slower job growth in June.

Minutes from the Federal Reserve's June meeting showed that while policymakers kept interest rates unchanged, some officials saw a case for raising borrowing costs before agreeing to hold rates steady.

Traders are currently pricing in a likely 25-basis-point rate hike by the Fed's December meeting.