Global stock markets are rising, with U.S. equities poised to extend gains for a fifth consecutive session. Optimism surrounding artificial intelligence, a pullback in oil prices, and lower bond yields are collectively fueling further risk appetite. Despite renewed strikes between the U.S. and Iran earlier this week, investors remain optimistic that peace negotiations between the two nations are making progress. U.S. stock index futures indicate that American markets may once again reach record highs. As of writing, Dow futures are up 0.28%, S&P 500 futures are up 0.34%, and Nasdaq futures are up 0.66%. Gains in chip stocks are helping to push these major indices to new all-time highs. The MSCI All Country World Index is also up 0.2%. In Europe, automotive and consumer stocks are leading gains, pushing the European market up 0.5%. SK Hynix and Micron Technology Join the "Trillion Dollar Club" Asian markets were broadly higher earlier, with Japanese and South Korean stocks hitting record highs driven by AI optimism. Japan's Nikkei 225 rose 0.5%, surpassing the 66,000-point mark for the first time. South Korea's KOSPI also reached a record high, gaining 3.4%; chipmaker SK Hynix saw its market capitalization surpass $1 trillion for the first time. Its domestic rival, Samsung Electronics, first breached the $1 trillion market cap threshold in early May, while U.S.-listed Micron Technology reached this milestone on Tuesday. Don't Fight the AI Trend Semiconductor company Marvell Technology is set to report earnings after the market closes, and its results will be closely watched to gauge how the AI boom is translating into actual corporate performance. In U.S. pre-market trading, investors continue to pour into memory chip and processor-related stocks. Micron Technology, which has already gained over 200% year-to-date, rose a further 5.3% pre-market. Marvell Technology gained 5.7% ahead of its first-quarter earnings report. Stocks of rocket, space, and satellite communication companies also extended their 2026 rally, with Rocket Lab up 8%. Meanwhile, ByteDance highlights the intensity of the global competition in AI infrastructure build-out. According to informed sources, the parent company of TikTok is discussing a spending plan of up to $70 billion for this year. Sources indicate the company's capital expenditure last year was approximately $25 billion. Lilian Chovin, Head of Asset Allocation at Coutts, stated, "We are in a very structural and massive theme—the AI capital expenditure theme. It would be very dangerous to fight it." These moves further reinforce the momentum of the AI trade. Investors are betting that chipmakers will capture a disproportionate share of global capital spending. At the same time, market sentiment is also buoyed by hopes that Middle Eastern oil supplies will soon normalize, easing traders' concerns about energy prices driving a surge in inflation. Strategists at Goldman Sachs have joined peers like Morgan Stanley and Deutsche Bank in forecasting that the U.S. benchmark index will reach 8,000 points this year. The team led by Ben Snider at Goldman Sachs raised their previous forecast of 7,600 points, stating that earnings growth driven by the AI boom will continue to propel the stock market higher. Fares Hendi, Portfolio Manager at Societe de Gestion Prevoir in Paris, said, "Given the capital expenditure plans of AI hyperscale cloud providers, there is no reason to believe this rally is about to end. If there is a breakthrough between the U.S. and Iran, the trend could accelerate further as investors cover short positions." U.S.-Iran Negotiations Remain on Track With limited overnight news from the Middle East, optimism that the U.S. and Iran are close to a deal to fully reopen the Strait of Hormuz has increased, pushing Brent crude down 3.2% to below $97 per barrel. The previous day, oil prices surged nearly 4% following a new round of U.S. strikes. Analysts at Deutsche Bank wrote, "A deal may not be as imminent as the market had hoped over the weekend. However, despite targeted U.S. strikes, negotiations appear to remain on track." Investors are weighing signs of diplomatic progress against renewed military tensions. The U.S. previously struck what it said were Iranian speedboats laying mines in the strait, to which Tehran responded by firing at U.S. aircraft. Deutsche Bank analysts stated, "There has been little clear information flow this week, making the market feel a deal may not be as imminent as hoped over the weekend. Nevertheless, negotiations seem to remain on track." Overall, market sentiment remains fragile as talks continue. Parties are attempting to achieve a lasting ceasefire in a conflict that has lasted three months and disrupted energy markets. Investors are also monitoring central bank officials' remarks to assess the crisis's impact on inflation and interest rate prospects. Amid heightened market bullishness, the European Central Bank warned of the risk of a sudden and sharp correction in financial markets, noting that investors are underestimating a range of threats, from the Iran war to fiscal pressures. Chovin added, "The question is how quickly, or if, the Strait of Hormuz situation returns to its pre-conflict state, which is where we remain cautious. Even if a deal is reached, commodity supply disruptions could remain at a fairly high level." Bond Market Sell-off Cools In the bond market, the yield on the benchmark U.S. 10-year Treasury note fell 1.8 basis points to 4.473%, declining for a third consecutive day and reaching its lowest level since May 14th. Eurozone government bond yields fell at the open. On the supply side for Wednesday, Germany will auction bonds maturing in 2041 and 2056, while Spain plans to issue a new bond maturing in 2036 via syndication. The yield on the 10-year German Bund fell 1.5 basis points to 2.965%; the 10-year Spanish bond yield fell 2.1 basis points to 3.386%. Dollar Flat, Gold Falls Below $4,500 The U.S. dollar was largely flat. The Dollar Index, which measures the greenback against a basket of currencies, stabilized at 99.07. The index gained 0.15% on Tuesday. The yield on the two-year U.S. Treasury note fell 2.3 basis points to 4.023%. Analysts at Danske Bank noted in a report, "Despite escalating tensions, behind-the-scenes negotiations between the two sides appear to be continuing, and the market believes both are seeking a diplomatic solution." The pullback in oil prices weakened the dollar, as the U.S. is a net oil exporter. Improved risk sentiment also weighed on the dollar due to its safe-haven status. The yen hovered around 159.29 per dollar, near the May lows that previously triggered Japanese intervention. Bank of Japan Governor Kazuo Ueda struck a slightly hawkish tone on Wednesday, stating that oil price shocks from the war could evolve into more persistent inflationary pressures in an environment of high inflation expectations and rising wages. European Central Bank Executive Board member Isabel Schnabel stated the previous day that the ECB should still raise interest rates in June, even if a peace deal is reached between the U.S. and Iran. On a relatively light day for economic data, the market is focusing on Thursday's release of the Personal Consumption Expenditures (PCE) price index. This is the Federal Reserve's preferred inflation gauge for its 2% annual inflation target. Gold prices fell below $4,500, failing to hold gains made earlier in the week. Renewed tensions between the U.S. and Iran have concerned traders. Analysts at Sucden Financial said, "Cautious optimism surrounding Iran-U.S. negotiations has generally improved market sentiment. However, confidence in a near-term resolution remains limited." Goldman Sachs Remains Bullish on U.S. Stocks: Raises S&P 500 Target to 8,000, Citing Ongoing AI Earnings Wave. Goldman Sachs raised its year-end 2026 target for the S&P 500 index from 7,600 points to 8,000 points, citing continued strength in corporate earnings. Goldman Sachs stated, "Year-to-date, all of the S&P 500's total return has been driven by earnings growth, and we expect this trend to continue in the coming months." The firm also raised its S&P 500 earnings per share forecasts: to $340 for 2026, representing 24% year-over-year growth; and to $385 for 2027, representing a further 13% increase. Goldman Sachs noted that beneficiaries of AI infrastructure will contribute about half of the S&P 500's earnings growth this year, adding that while weak consumption and high costs pose risks, strong AI investment will offset these pressures. Stocks in Focus Cloud security firm Zscaler provided current-quarter revenue guidance of $875 million to $878 million, below the analyst consensus of $879 million compiled by London Stock Exchange Group, sending its shares down over 23%. However, the company's third fiscal quarter performance was strong: adjusted earnings per share were $1.08, beating expectations of $1.01; quarterly revenue was $850 million, also above the market consensus of $835 million. Dragged down by Zscaler's report, two cybersecurity stocks also weakened. Palo Alto Networks fell 4%, and CrowdStrike fell over 3%. Bath & Body Works rose 15% after the retailer reported first-quarter results and raised its current-quarter guidance. According to data from FactSet, the company expects second-quarter earnings per share of $0.20 to $0.25, versus a market expectation of $0.21; first-quarter profit and revenue also slightly exceeded estimates. Semiconductor company Semtech met both adjusted profit and revenue estimates for the first quarter, sending its shares up 7%. Data from London Stock Exchange Group shows the company's guidance for the current quarter's profit, adjusted operating margin, and EBITDA also exceeded analyst expectations. Following its market capitalization surpassing $1 trillion on Tuesday, joining the ranks of trillion-dollar companies, Micron Technology's rally continued. Its shares rose 7% on Wednesday, leading S&P 500 component stocks in pre-market trading. SanDisk rose 3% after Barclays upgraded the stock to Overweight. The bank stated that supply-demand imbalances will persist until 2027, giving companies like SanDisk strong product pricing power. Medical device company Insulet announced a voluntary recall of multiple batches of insulin delivery pods due to a manufacturing defect that could lead to insufficient insulin dosing, sending its shares down about 5%. Dick's Sporting Goods reaffirmed its full-year earnings guidance, with an adjusted EPS forecast of $13.50 to $14.50, which was viewed as overall conservative, leading to a 2.5% drop in its stock price. The analyst consensus for full-year EPS, according to FactSet, is $14.30. Data from London Stock Exchange Group shows its first-quarter EPS was $2.90, slightly below the expected $2.92, while revenue slightly exceeded estimates. Cloud content management service provider Box issued full-year adjusted EPS guidance of $1.56, missing the analyst consensus of $1.63, sending its shares down 1.5%. The company's first-quarter performance was decent: adjusted EPS was $0.37, and revenue was $306 million, both above market expectations of $0.36 and $304 million, respectively. MGM Resorts International rose 3% after JPMorgan upgraded the stock from Neutral to Overweight. The bank's analysis indicated that despite a challenging macro environment, U.S. leisure travel demand remains resilient, improving growth prospects for the Las Vegas market. Modine Manufacturing reported fourth fiscal quarter adjusted EPS of $1.71 and revenue of $954.5 million; market expectations compiled by FactSet were $1.55 and $920.7 million, respectively. The better-than-expected results pushed the stock up 2.5%. The company had previously secured a $4 billion data center cooling project, sending its shares up nearly 14% on Tuesday. Abercrombie & Fitch reported first-quarter adjusted EPS of $1.47, significantly above the market expectation of $1.28, sending its shares up over 4%. However, revenue for the period was slightly below estimates, and guidance for the new quarter also fell short of market expectations.