Dow slips as S&P 500, Nasdaq hit records on AI stock rally

• Micron Technology's market cap exceeded $1 trillion for the first time after a significant UBS upgrade, with related stocks Seagate (+4%) and Western Digital (+8%) also rallying, pushing the Roundhill Memory ETF up 14% to a record high
• First-quarter earnings growth expectations surged to 29% year-over-year from 16.1% a month earlier, fueled by investor optimism around AI infrastructure and data center capital expenditures
• Oil prices jumped roughly 4% (Brent to $99.58/barrel) amid ongoing US-Iran conflict developments, with Tehran reportedly seeking $24 billion in frozen funds as part of potential negotiations

Market Summary: AI Rally Drives Mixed Session

Market Performance:

U.S. stocks closed mixed on Tuesday, May 26, 2026, following the Memorial Day holiday. The S&P 500 rose 0.62% to a record 7,519.47, while the Nasdaq Composite gained 1.18% to 26,655.89, both hitting fresh intraday highs. The Dow Jones underperformed, falling 107 points (-0.21%) to 50,473.10.

Key Drivers:

Semiconductor and AI-related stocks fueled the rally, with Micron Technology leading gains after UBS significantly raised its price target. Micron's market capitalization surpassed $1 trillion for the first time. Other memory stocks followed: Seagate Technology climbed 4%, Western Digital surged 8%, and the Roundhill Memory ETF jumped 14% to a record high. The Philadelphia Semiconductor Index also reached an all-time high, with Qualcomm and Marvell Technology advancing.

Earnings Outlook:

Growing optimism around AI infrastructure spending is driving earnings expectations higher. LSEG data shows first-quarter earnings growth projections rose to 29% year-over-year, up from 16.1% a month earlier.

Geopolitical Concerns:

Investor sentiment remained tempered by U.S.-Iran tensions. President Trump indicated negotiations were "proceeding nicely" but warned of potential further action. Iran reportedly seeks $24 billion in frozen funds. U.S. forces conducted defensive strikes on Iranian missile sites. Oil prices reflected the volatility, with Brent crude rising 4% to $99.58 per barrel and WTI settling at $93.89.

Market Outlook:

Analysts noted a "tug of war" between enthusiasm for AI-driven capex spending and concerns about broader economic fragility, with investors displaying "pathological optimism" about potential conflict resolution.