US STOCKS-Wall St indexes advance with boost from chips, Iran optimism

U.S. stock indexes closed higher on Thursday, driven by semiconductor shares and easing inflation fears, despite investors pricing in potential interest rate hikes from the Federal Reserve.

U.S. stock indexes closed higher on Thursday, with a strong boost from semiconductor shares and easing inflation fears, although investors still priced in interest rate hikes this year from the Federal ‌Reserve.

The Philadelphia semiconductor index sharply outperformed the rest of the market as Intel's shares jumped to a record high. U.S. President Donald Trump said iPhone maker Apple had agreed to work with Intel to design and manufacture its chips in the U.S. Early in the session, oil prices slid to their lowest levels since early March after the U.S. and Iran signed an interim agreement ‌that extends the April ceasefire by another 60 days to allow the sides time to reach a final deal.

Although Trump threatened to resume attacks if Iran failed to ‌honor its commitments, the first ships started sailing through the Strait of Hormuz, where transportation of oil, gas, fertilizer and other cargoes had been disrupted since the start of the war. According to preliminary data, the S&P 500 gained 78.31 points, or 1.06%, to end at 7,498.41 points, while the Nasdaq Composite gained 496.28 points, or 1.87%, to 26,507.05. The Dow Jones Industrial Average rose 70.29 points, or 0.14%, to 51,562.84.

All three of Wall Street's major ⁠indexes tumbled ​in the previous session as investors priced in ⁠the likelihood of Fed rate hikes, after the central bank's new Chair Kevin Warsh underscored the need to curb inflation and other policymakers signaled higher borrowing costs ahead. "Markets got spooked by Warsh yesterday essentially promising to contain inflation," ⁠said Tony Welch, chief investment officer at SignatureFD, but he pointed to easing oil prices and recent strength in earnings and economic data. "All together, the package of data is still supportive whether or not the ​Fed has become a little bit more hawkish."

Traders were betting on a roughly 50% chance of a 25-basis-point rate hike as soon as September and a ⁠roughly 20% probability for a 50-basis-point hike, according to CME Group's FedWatch tool. Investors were still assessing Warsh's indication that the Fed would provide less guidance on future policy moves and his stated focus on price stability. Eric Johnston, chief ⁠equity ​and macro strategist at Cantor, said: "The conclusion today is that the Fed has more credibility around inflation."

On the data front, Labor Department data showed the number of Americans filing claims for unemployment benefits fell last week as layoffs remained low. In individual stocks, shares of Accenture tumbled after the company trimmed the top end of its annual revenue forecast. Peers including ⁠Cognizant Technology Solutions , Gartner and IBM fell in sympathy.

Among other movers, Kroger shares fell after the grocer reported a lower-than-expected profit for the first quarter and kept its annual ⁠forecasts unchanged. Shares in Elon Musk's SpaceX fell ⁠for a second straight day, after the space and AI company had rallied sharply for the first few days of trading after its market debut last Friday. Thursday also marked the once-in-a-quarter simultaneous expiry of derivatives contracts tied to stocks, index options and futures, also known ‌as "triple witching," which can boost trading ‌volume and aggravate volatility.