S&P 500 and Nasdaq Set Fresh Records as AI, Retail and Iran Relief Drive the Tape

U.S. equities extended Wednesday’s breakout on Thursday, with the S&P 500 and Nasdaq Composite finishing at fresh records while the Dow held near its record zone. The tape was not simply a geopolitical relief trade: AI software demand, big-cap tech leadership and a surprisingly strong retail earnings cluster gave investors enough earnings evidence to look through a hotter headline PCE inflation print.

The day’s cleanest message was that markets are still rewarding proof of demand. Snowflake’s blowout quarter and AWS commitment lit up software multiples; Best Buy, Dollar Tree and Hormel showed that parts of the consumer complex are adapting to inflation rather than folding under it; and Agilent’s fiscal Q2 beat suggested life-sciences tools may be finding a firmer bottom. That combination outweighed softer GDP, sticky year-over-year PCE and a still-hawkish Fed chorus.

The complication is that the same macro forces that powered the rally remain volatile. Oil reversed around fresh Iran headlines, gold jumped almost 2%, and Treasury yields finished lower but not broken. This was a record close with breadth, but not a record close that eliminated the policy and commodity risk premium.

Closing Scoreboard

What Happened

The session began with a tug-of-war between inflation and diplomacy. April PCE inflation came in hot at 3.8% year over year, while core PCE held at 3.3%. Normally that mix would be a problem for growth equities, especially with Fed officials already warning that rate hikes remain possible if price pressure fails to converge back toward target. Instead, investors focused on the composition: core inflation rose 0.2% month over month, personal spending matched expectations at 0.5%, and the oil-risk premium faded enough to prevent a disorderly rates reaction.

The bigger intraday driver was the report that Washington and Tehran were moving toward a 60-day ceasefire extension and phased resumption of Strait of Hormuz tanker traffic. The market has been hypersensitive to every Hormuz headline because the conflict has pushed energy inflation back into the Fed conversation. Thursday’s move said investors are willing to price a diplomatic path quickly, even if oil itself remains jumpy.

AI software then supplied the earnings catalyst. Snowflake surged 36.9% after a beat and a five-year, $6 billion AWS infrastructure commitment. The move pulled up Oracle, Palantir, ServiceNow, AMD and the broader Technology Select Sector SPDR, which gained 1.31% in the MarketWatch sector ETF read. Unlike the chip-heavy rallies earlier in May, Thursday’s bid reached databases, application software, security and infrastructure names.

Retail results rounded out the bull case. Best Buy, Dollar Tree and Hormel all moved sharply higher after earnings, giving investors a different kind of confirmation: the consumer is not universally healthy, but companies with sharper pricing, margin discipline and value propositions can still beat expectations even as PCE runs hot.

Mega-Cap and Key Movers

Top 3 Winners & Top 3 Losers

Top 3 Winners

BBY — Best Buy Co. Inc.   +18.28%   close $76.34. Best Buy surged after Q1 sales of $8.94 billion beat the $8.82 billion consensus and comparable sales rose 2.0% versus a 0.7% decline a year earlier. The stock traded 9.36 million shares, roughly 2.16 times its 65-day average, as investors repriced the company’s margin discipline and 5% dividend yield. Jefferies also raised its target to $89 from $83, while Piper Sandler lifted its target to $77 from $68.

DLTR — Dollar Tree Inc.   +17.87%   close $113.00. Dollar Tree rallied after Q1 adjusted EPS of $1.74 topped the $1.55 consensus and the company lifted FY2026 adjusted EPS guidance to a $6.70–$7.10 range. MarketWatch noted that sales topped forecasts even as fewer customers shopped, because those who did shop spent more. Volume reached 13.58 million shares, nearly four times average, and Truist raised its price target to $136 from $107 after the report.

A — Agilent Technologies Inc.   +16.87%   close $135.40. Agilent jumped after fiscal Q2 revenue of $1.83 billion and non-GAAP EPS of $1.49 beat estimates, with management raising its revenue outlook. Barron’s described the quarter as leaving Wall Street with “little to pick at,” and the stock’s 6.48 million-share volume was about 2.87 times the 65-day average. BofA upgraded the stock to Buy, and TD Cowen raised its target to $155 from $147.

Top 3 Losers

P — Everpure Inc.   −12.3%   Russell 1000 loser. Everpure fell even though Q1 results beat expectations, because investors focused on soft Q2 revenue guidance of $553 million, well below Wall Street projections. The move was a classic “beat but guide-down” selloff: the market was unwilling to pay a premium multiple without clearer second-half acceleration.

SNPS — Synopsys Inc.   −8.3%   Russell 1000 loser. Synopsys slid after fiscal Q2 revenue of $2.28 billion missed the $2.30 billion consensus by roughly $20 million, despite an EPS beat. The semicap design-software name had already priced in a healthier guide, so a modest revenue miss and limited upside were enough to trigger profit-taking.

NSC — Norfolk Southern Corp.   −5.0%   Russell 1000 loser. Norfolk Southern lagged as transports failed to participate in the record-high equity tape; the Dow Jones Transportation Average slipped 0.31%. No single company-specific catalyst dominated the move in accessible news flow, so the decline reads as a sector-driven and rate-sensitive rotation away from rails while investors chased AI software, retail and small-cap beta.

Sector Breakdown

The sector map was a clean risk-on split: health care and technology led, while utilities, real estate and financials lagged. That matters because it confirms the market was not simply buying everything with a yield. Investors favored earnings momentum, AI leverage and idiosyncratic beats over defensive duration.

Global Markets

Global closes were mixed and less enthusiastic than U.S. equities. In Europe, the STOXX 600 fell 0.49% to 625.11, the FTSE 100 lost 0.75% to 10,425.96, the DAX slipped 0.34% to 25,092.25, and France’s CAC 40 declined 0.23% to 8,188.87. Italy’s FTSE MIB was the outlier, rising 0.50% to 49,825.32.

Asia also leaned defensive. Japan’s Nikkei 225 fell 0.47% to 64,693.12, Hong Kong’s Hang Seng dropped 1.27% to 25,006.16, and Australia’s S&P/ASX 200 lost 1.43%. Shanghai held positive with a 0.12% gain to 4,098.64. The U.S. again looked like the highest-conviction equity market because it had the strongest earnings catalyst set.

Fixed Income and Commodities

Treasuries absorbed the morning inflation scare better than the headline PCE number suggested. The 10-year yield slipped 3 basis points to 4.458%, while the 2-year yield eased 1 basis point to 4.031%. The curve steepened to roughly 42.7 basis points, an important move because it implies investors are separating near-term Fed caution from longer-term growth optimism.

Oil remained volatile. WTI finished at $89.20, up 0.59%, after trading between $87.11 and $92.52. Brent closed near $93.07, up 0.40%, with reports of progress toward an Iran peace framework offset by fresh strike headlines and inventory declines. Gold rose 1.81% to $4,529.10, which tells us the market is not treating Middle East risk as fully resolved.

Corporate News

AI and Software

Snowflake was the day’s software bellwether. The company’s Q1 beat, AI-cloud order commentary and five-year AWS infrastructure commitment helped investors re-rate the broader software stack. Oracle, Palantir and ServiceNow rallied sharply, while MongoDB carried that sympathy into after-hours trading with a 2.86% post-close gain to $335.00 after its own earnings release.

Retail and Consumer Staples

Best Buy and Dollar Tree proved that the consumer story is becoming more selective rather than uniformly weak. Best Buy’s comparable-sales swing and Dollar Tree’s earnings guide both suggest demand is still available when companies can pair value with margin control. Hormel added a defensive-consumer confirmation, rising 13.29% to $23.75 after adjusted EPS of $0.40 beat the $0.35 consensus and management backed FY2026 adjusted EPS guidance of $1.43–$1.51.

Analyst Actions

Agilent received a BofA upgrade to Buy and multiple target increases after its Q2 report. Dollar Tree saw Truist raise its target to $136 from $107 and BofA lift its target to $100 from $89, while Best Buy received higher targets from Jefferies and Piper Sandler. First Solar also gained 11.66% to $305.58 after GLJ Research upgraded the stock to Buy and raised its target to $315, reinforcing clean-energy momentum tied to AI power demand.

Economic Data

The data mix was not benign. Headline PCE accelerated to 3.8% year over year, personal income stalled, and GDP was revised down to 1.6%. Bulls leaned on the softer monthly core PCE print and the fact that real spending stayed positive, but the Fed will not view Thursday’s data as permission to declare victory.

After-Hours Movers

The AlphaEdge Take

Thursday’s record close was stronger than it looked because it was not just a single-stock or single-headline rally. The market got a geopolitical relief bid, a software earnings bid, a small-cap bid and a retail earnings bid in the same session. That breadth gives the move credibility into Friday.

The caution is that the macro backdrop did not improve as much as the index levels imply. Inflation is still too high, GDP was revised lower, oil remains one headline away from another squeeze, and the Fed has no reason to turn dovish. In that setup, earnings quality is the market’s main shield. Companies that beat and raise are being rewarded aggressively; companies that merely beat but guide conservatively are still punished.

For Friday, the key test is whether the S&P 500 can hold the 7,540–7,560 breakout zone while technology leadership broadens beyond the Snowflake sympathy chain. If Dell’s after-hours strength carries into hardware and infrastructure names, the AI trade has another leg. If rates or oil back up, defensives may stabilize but the record-high chase probably pauses.

Bottom line: the tape remains bullish, but it is bullish on proof. Stay with earnings momentum, avoid chasing weak guidance, and treat any Iran-driven oil spike as the first warning that Thursday’s record close needs a volatility cushion.