US STOCKS-Wall St advances as Iran deal optimism offsets hawkish Fed; Intel jumps

U.S. stocks rebounded on Thursday, led by semiconductor shares, as optimism about a Middle East peace deal and a potential Apple-Intel chip deal offset hawkish Federal Reserve concerns.

U.S. stocks rebounded on Thursday with semiconductor shares leading gains as optimism about a Middle East peace deal offset worries about a hawkish Federal Reserve under new Chair Kevin Warsh.

Intel's shares jumped nearly 8% to hit a record high after U.S. President Donald Trump ‌said Apple had agreed to work with the company to design and manufacture its chips in the United States. Other chip stocks also moved higher. Nvidia rose 2.3%, while Micron and Marvell Technology added over 8.4% and 12%, respectively.

The Philadelphia SE Semiconductor index hit a record high and was last up 6.3%, while the S&P 500 tech index rose 2.5% All three major indexes sank in the previous session as investors priced in ‌the likelihood of more Federal Reserve rate hikes, after Warsh underscored the need to curb inflation and other policymakers signaled higher borrowing costs ahead.

Meanwhile, the United States and Iran released the ‌text of a signed interim agreement that extends the April ceasefire by another 60 days to allow the two sides to reach a final deal. Oil prices slid almost 3% to their lowest since the first trading day of the Iran war, keeping alive hopes that inflation could be tamed without hiking interest rates. "The signing of the initial agreement between the U.S. and Iran has provided some additional confidence," said Jim Baird, Chief Investment Officer at Plante Moran Financial Advisors. Oil prices being down "should ⁠provide some ​near-term relief, both in terms of inflation and might ⁠provide a little bit more cover for the Fed to continue to evaluate the current state of policy and at least push back the margins against the narrative that they will need to hike before the end of the year."

Markets ⁠are currently pricing in a 50% chance of a 25-basis-point rate hike in September, according to CME Group's FedWatch tool, higher than 27% priced in on Wednesday. Seven out of 11 major S&P 500 sectors moved higher with utilities ​and industrials gaining almost 1.3% each.

The small-cap Russell 2000 index rose 1.5%. Shares of Accenture tumbled almost 16.6% after the company trimmed the top end of its annual revenue forecast. Peers ⁠Cognizant Technology Solutions and IBM dropped 9.1% and 5.7%, respectively.

The S&P 500 software sector was dragged to a more than two-month low, shedding 1.5%. At 11:23 a.m. ET, the Dow Jones Industrial Average rose 184.68 points, or 0.36%, to 51,677.23, the S&P 500 gained ⁠67.24 ​points, or 0.91%, to 7,487.34 and the Nasdaq Composite gained 324.76 points, or 1.25%, to 26,344.72.

Markets have regained ground from a slump in early June, with a resilient economy, a broadening rally beyond tech shares and optimism surrounding a U.S.-Iran deal boosting sentiment. All three indexes were on track to end higher for a second consecutive week before Friday's Juneteenth holiday.

On the data front, Labor ⁠Department data showed the number of Americans filing claims for unemployment benefits fell last week as layoffs remained low. Thursday also marks 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.

Among other movers, Kroger dropped 6% after the grocer reported a lower-than-expected profit for the first quarter and kept its annual forecasts unchanged. Advancing issues outnumbered decliners by a 1.77-to-1 ratio on the NYSE and by a 1.57-to-1 ratio on the Nasdaq. The S&P 500 posted 27 new ‌52-week highs and 24 new ‌lows while the Nasdaq Composite recorded 90 new highs and 103 new lows.