U.S. equities finished higher on Thursday as investors returned to semiconductor stocks while easing oil prices helped improve overall market sentiment despite continued military tensions between the United States and Iran.

The Nasdaq Composite gained 1.30% to close at 26,206.89, while the S&P 500 advanced 0.81% to 7,543.64. The Dow Jones Industrial Average added 139.02 points, or 0.27%, ending the session at 52,487.41.

Semiconductor Stocks Lead Market Recovery

Technology shares once again provided the market’s strongest support after recent volatility surrounding artificial intelligence valuations.

The VanEck Semiconductor ETF (SMH) rose 2.5%, led by a 4.5% gain in Micron Technology. Sandisk surged 7.6%, extending strong momentum across memory-chip manufacturers as investors continued to favor companies benefiting from AI-driven demand.

The rebound followed several sessions of heavy selling across semiconductor stocks, suggesting investors remain willing to buy leading AI infrastructure companies during market pullbacks.

Global Markets Also Move Higher

European equities also recovered, with the pan-European STOXX 600 rising 0.8%.

Across Asia, performance was mixed:

• Japan’s Nikkei 225 gained 1.4%.
• South Korea’s Kospi advanced 0.62%.
• China’s CSI 300 climbed 2.5%.
• Hong Kong’s Hang Seng slipped 0.5%.

The broad recovery reflected improving risk appetite despite ongoing geopolitical uncertainty.

Oil Prices Decline Despite Renewed Military Action

Market sentiment improved after crude oil prices fell even as the U.S. conducted another round of strikes against Iranian targets.

The latest military operations followed Iranian attacks on commercial shipping near the Strait of Hormuz, a critical global energy transit route that remains under close investor scrutiny.

However, oil prices eased after President Donald Trump stated that Iran had contacted the United States seeking negotiations. Reports also indicated that Qatar and Pakistan were working to facilitate renewed diplomatic discussions between both countries.

The decline in oil prices helped relieve immediate concerns about inflation and energy-related market risks.

Inflation Risks Remain on Investors’ Radar

Despite Thursday’s market gains, investors continue to weigh the inflationary implications of geopolitical instability.

Market strategists noted that fluctuating oil prices, resilient consumer spending, and continued investment in artificial intelligence infrastructure could keep inflation elevated during the remainder of 2026.

While AI investment may improve productivity over the longer term, the massive capital expenditures currently flowing into data centers, semiconductors, and digital infrastructure continue to support strong economic activity that could complicate the Federal Reserve’s policy outlook.

Outlook

Investors are expected to remain focused on two major themes in the weeks ahead: developments surrounding U.S.-Iran negotiations and the upcoming corporate earnings season led by major semiconductor companies.

Continued strength in AI-related earnings could support further gains in technology shares, while any escalation in Middle East tensions or renewed spikes in oil prices may increase market volatility and influence expectations for future Federal Reserve policy decisions.