Wall St set to extend rally as Middle East peace hopes, AI optimism boost sentiment

By Niket Nishant and Utkarsh Hathi

Wall Street's main indexes were on track to open higher on Wednesday and extend their strong run on hopes of a potential U.S.-Iran peace agreement and sustained enthusiasm around artificial intelligence.

The rally, which propelled the S&P 500 and the Nasdaq Composite to record highs on Tuesday, showed few signs of easing after Advanced Micro Devices forecast second-quarter revenue above expectations, driven by robust demand for its data-center chips.

The gain in equities has shown that the market "cannot escape the euphoria surrounding AI investment," said Kevin Gordon, head of macro research and strategy at the Schwab Center for Financial Research.

"A more protracted war and further climb in gasoline prices make for stronger spending headwinds, but until there are clear signs of job loss, the economy remains distanced from a full-blown recession."

The ADP National Employment Report showed U.S. private-sector employment increased by 109,000 jobs in April, above an expectation of 99,000.

Oil prices fell to a two-week low, with Brent crude futures slipping 7.9%. Washington and Tehran were closing in on an agreement over a one-page memorandum to end the war, a Pakistani source said.

In its current form, the memorandum would declare an end to the conflict and the start of a 30-day period of negotiations on a detailed agreement to open the Strait of Hormuz, limit Iran's nuclear program and lift U.S. sanctions, Axios reported.

The gains in equities reflect rising risk appetite among investors - if corporate earnings remain strong and hopes for a peace deal stay alive.

However, others warned against unfettered optimism unless there were more concrete signs of progress.

"Wall Street continues to double down on its bet that the war in the Middle East will not re-escalate and disrupt the market's earnings-driven surge to all-time highs," said Kyle Rodda, senior financial market analyst at Capital.com.

"There's a high risk that if that wager is wrong, risk assets would move sharply in reverse. However, the signals sent from the United States appear to offer reassurance that it's not interested in renewing hostilities."

U.S. President Donald Trump's aggressive rhetoric continued as he warned that "bombing starts" if Iran did not cooperate.

At 8:25 a.m. ET, Dow E-minis rose 422 points, or 0.85%, S&P 500 E-minis gained 57 points, or 0.78%, and Nasdaq 100 E-minis advanced 367.5 points, or 1.31%.

AMD jumped 16.6% in premarket trading, while rival Intel rose 4.3%. Super Micro soared 13% following a stronger-than-expected forecast for fourth-quarter revenue and adjusted profit.

Alphabet surged 1.8%, narrowing the gap with Nvidia in the race to become the world's biggest company by market value; Nvidia rose 1.9%.

Arm Holdings gained 11% ahead of its quarterly results.

(Reporting by Niket Nishant and Utkarsh Hathi in Bengaluru; Editing by Arun Koyyur and Pooja Desai)

Copyright Reuters or USA Today Network via Reuters Connect.

This story was originally published May 6, 2026 at 5:46 AM.