US stock markets this week: Nasdaq leads Wall Street rally as AI stocks surge; S&P 500, Dow Jones also up around 1%

US stock markets this week: US stock markets wrapped up the week on a strong note, with major benchmark indices posting solid gains as easing geopolitical tensions in the Middle East and continued enthusiasm around artificial intelligence lifted investor sentiment. The rally came despite lingering concerns over the Federal Reserve's interest-rate outlook and signs of a stronger US dollar.

The S&P 500 climbed about 1% during the week to close at 7,500.58, while the Nasdaq Composite outperformed with gains of more than 2.5%. The Dow Jones Industrial Average also advanced, rising 0.7% to end at 51,564.70.

Technology and semiconductor stocks remained the key drivers of market momentum, extending a trend that has dominated Wall Street for much of the year. Investors continued to favour companies linked to artificial intelligence and digital infrastructure, helping offset concerns about higher-for-longer interest rates.

Meanwhile, Elon Musk's SpaceX ended the week 15% higher after a blockbuster debut. However, it ended 3.5% lower at $185 on Friday.

Oil Eases as US-Iran Agreement Calms Markets

A major factor supporting equities this week was the reduction in geopolitical tensions after an interim agreement between the US and Iran enabled the resumption of oil shipments through the Strait of Hormuz, one of the world's most critical energy corridors.

The development eased fears of supply disruptions and helped stabilise broader financial markets. Although crude prices remained volatile, concerns about a prolonged energy shock receded significantly.

Brent crude settled at $79.85 a barrel, while US West Texas Intermediate (WTI) crude ended at $76.60. The moderation in energy concerns provided relief to investors who had been worried that a sharp spike in oil prices could reignite inflationary pressures.

However, geopolitical risks have not disappeared entirely. Market participants continued to monitor developments in the Middle East after comments from US Vice President JD Vance highlighted potential risks surrounding regional security and the durability of the current ceasefire arrangement.

Fed Signals Keep Investors on Edge

While equities rallied, investors remained cautious after the Federal Reserve signalled a relatively hawkish stance at its latest policy meeting. The central bank left interest rates unchanged at 3.50%-3.75%, but policymakers indicated they remain vigilant about inflation risks.

The Fed's tone pushed the US dollar index to its highest level in a year and reinforced expectations that borrowing costs could remain elevated for longer than previously anticipated.

In the bond market, Treasury yields retreated slightly after an initial post-Fed surge. The benchmark 10-year Treasury yield eased to 4.437%, while the two-year yield, which is particularly sensitive to monetary policy expectations, slipped to 4.153%.

With US markets closed on Friday for the Juneteenth holiday, trading activity paused after a week marked by strong equity gains and shifting expectations around monetary policy. Investors will return next week focused on inflation readings, economic data releases and corporate developments that could shape expectations for the Federal Reserve's next move.

Despite ongoing uncertainty around rates and geopolitics, Wall Street's resilience this week underscored investors' continued confidence in technology-led growth and the broader strength of the US economy.

Disclaimer: This story is for educational purposes only. Please consult with an investment advisor before making any investment decisions.