US shares rose on Wednesday as markets responded to reports of progress towards a wider US-Iran agreement. The Dow Jones Industrial Average gained about 540 points to close above 49,800 after nearing 50,000 intraday, while the S&P 500 added 1.1% and the Nasdaq Composite rose 1.5% on stronger semiconductor stocks.
Axios reported that the US and Iran were nearing a deal that could include a moratorium on Iranian nuclear enrichment. An Iranian foreign ministry spokesperson told CNBC that Iran was reviewing the US proposal, though President Donald Trump later said an agreement was “a big assumption” and warned strikes would resume “at a much higher level and intensity” if talks failed.
Oil Prices And Geopolitical Risk
Oil prices fell as perceived risks around the Strait of Hormuz eased. WTI futures dropped 5% to trade above $96 a barrel and Brent fell 5% to trade above $103, after Trump said he was pausing “Project Freedom” to escort shipping.
AMD jumped 15% after beating Q1 forecasts and giving a positive Q2 outlook. The VanEck Semiconductor ETF rose 3% and Intel gained nearly 2%.
ADP reported April job growth of 109K versus a 99K consensus, after March was revised to 61K, ahead of Friday’s NFP consensus of 60K. Fed remarks were described as hawkish, including Alberto Musalem at 7.0 versus a 6.0 average, with Treasury yields remaining supported.
We remember how the de-escalation with Iran in May 2025 caused crude oil’s geopolitical risk premium to evaporate almost overnight. That 5% single-day drop in WTI prices was a sharp lesson in how quickly energy markets can reprice. With WTI now trading below $80 a barrel in May 2026 and recent U.S. inventory reports from the EIA showing builds, it seems the market is more concerned with supply fundamentals than renewed conflict.
Looking back, the Dow’s failure to hold the 50,000 level during that 2025 rally was a key moment, signaling exhaustion. Today, with the CBOE Volatility Index (VIX) hovering near a low of 13, there is a sense of complacency that feels fragile. We should consider using low-cost options to hedge against a sudden spike in volatility, as low implied volatility makes protection relatively cheap.
Semiconductors And Market Risk Appetite
The powerful rally in semiconductors we saw a year ago, sparked by AMD’s strong earnings, was just the beginning of the AI trade’s dominance. This theme remains the market’s primary engine, with chipmakers continuing to report strong growth into early 2026. Monitoring options flows in the VanEck Semiconductor ETF (SMH) remains a key strategy for gauging the health of the entire tech sector and the broader market’s risk appetite.
In 2025, we were contending with hawkish Fed commentary, but the narrative has now shifted completely toward the timing of rate cuts. The recent April 2026 Nonfarm Payrolls report came in at 175,000, softer than expected, which strengthens the case for the Fed to begin easing policy later this year. This change in monetary policy outlook presents opportunities in rate-sensitive sectors that were under pressure this time last year.
