US STOCKS-Wall St rises as chip rally offsets renewed Iran worries

Wall Street's main indexes rose on Thursday, driven by a rally in chip stocks led by Micron Technology, despite concerns over escalating US-Iran tensions.

Wall Street's main indexes gained on Thursday, as a Micron Technology-led rally in chip stocks outweighed concerns that renewed U.S. and Iranian attacks would prolong the conflict and stoke broader geopolitical risks.

Iran said on Thursday it ‌had hit U.S. military targets in Kuwait, Qatar and Bahrain, following Wednesday's U.S. strikes, further straining fragile ceasefire efforts. The Philadelphia SE Semiconductor index gained 4.6% in morning trading to be on track for a second straight positive session.

Micron Technology jumped 7.5% after laying out plans to invest more than $250 billion in the United States through 2035, to benefit from an ‌AI-fueled surge in demand for memory chips. Applied Materials gained 7% and On Semiconductor leaped 9.3%. The information technology sector advanced 1.5%, leading gains on the benchmark S&P ‌500 index.

Conversely, Meta Platforms fell 1% after Reuters reported that the company plans to start making AI chips from September. The decline dragged down the communications services index and capped gains on S&P 500. Sentiment towards AI-linked stocks has been volatile lately amid concerns about the sustainability of a rally that has helped Wall Street reach record levels in 2026, despite simmering Middle East tensions.

"The rebound in chip stocks is likely ⁠sustainable, even though ​the sector may have risen too far, ⁠too fast and could see some short-term digestion of gains," said Sam Stovall, chief investment strategist, CFRA Research. "My concern is not necessarily with semiconductors in particular or tech in general, but with the other ⁠areas of the market; because, with tensions in Iran resuming, it's very uncertain as to what kind of an impact that would have on inflationary projections."

IBM and Microsoft fell 2% and 0.8%, respectively. ​Bloomberg reported Starbucks had tapped AI to reduce its reliance on both companies. At 12:03 p.m. ET, the Dow Jones Industrial Average rose 174.99 points, or 0.33%, ⁠to 52,523.38, the S&P 500 gained 48.31 points, or 0.65%, to 7,531.02 and the Nasdaq Composite gained 228.83 points, or 0.89%, to 26,099.48.

On the data front, the number of Americans filing claims for unemployment benefits fell ⁠last ​week, suggesting the labor market remained stable despite a slowdown in job growth in June. The Federal Reserve kept interest rates unchanged at its June meeting, under new Chair Kevin Warsh, but minutes released on Wednesday showed a few policymakers saw a case for raising borrowing costs before ultimately agreeing to hold steady.

Traders are pricing ⁠in at least one 25-basis-point rate hike by the end of the year, according to LSEG data. Among others, PepsiCo fell 3.3% despite the snacks and soda giant beating ⁠second-quarter revenue estimates.

Costco Wholesale's shares were ⁠down 4.5% to a six-month low after the grocery retailer reported decelerating comparable sales for June. Advancing issues outnumbered decliners by a 2.12-to-1 ratio on the NYSE and by a 1.91-to-1 ratio on the Nasdaq.

The S&P 500 posted no new 52-week highs and ‌no new lows while the ‌Nasdaq Composite recorded no new highs and no new lows.