US open: Stocks rise on chip recovery despite fresh Iran strikes

(Sharecast News) - Major indices were in the green early on Thursday as chipmakers staged a rebound and oil prices eased, even after the US carried out further strikes against Iran overnight.

As of of 1515 BST, the Dow Jones Industrial Average was up 0.79% at 50,310.95, while the S&P 500 advanced 0.74% to 7,320.84 and the Nasdaq Composite came out of the gate 0.94% firmer at 25,405.48.

The Dow opened 392.17 points higher on Thursday, taking a bite out of heavy losses recorded in the previous session as heightened geopolitical conflict in the Middle East and concerns about rising inflationary pressures hammered risk appetite.

However, Micron, AMD and Intel all advanced in early trade, with the sector's recovery coming as investors looked ahead to SpaceX's blockbuster debut on Friday. Some economists have suggested that recent chip weakness reflected portfolio reshuffling ahead of what will be the largest IPO on record at a valuation of around $1.8trn. Tech sentiment was tempered, however, by a sharp drop in Oracle, which slid more than 9% in pre-market action after unveiling plans to raise a further $20bn in equity and debt to support its AI investment programme.

Oil prices slipped despite renewed geopolitical tension, with West Texas Intermediate crude easing 0.72% to $89.38 a barrel even as US Central Command said lateon Wednesday that American forces had launched additional "selfdefence strikes" against Iran at the direction of Donald Trump. Trump also took to social media to warn that it would be attacking Iran "VERY HARD TONIGHT". He also claimed: "At some point in the not too distant future, we will be taking Kharg Island, and other oil infrastructure points, and assume total control of their Oil and Gas Markets".

On the macro front, US producer prices accelerated again in May, according to the Bureau of Labor Statistics, with the headline producer price index rising 1.1% on the month and 6.5% over the year. May's monthly increase matched April's 1.1% gain and followed a 0.7% rise in March, while the annual rate marked the strongest reading since November 2022. The bulk of the monthly rise came from goods prices, which jumped 2.8% - the largest increase since the series began in 2009 - driven by a 10.7% surge in energy costs. Core PPI, which strips out volatile food prices, energy prices and trade services, rose 0.8% for the sharpest monthly increase since March 2022. Over the year, core producer prices were up 5.1%, the largest annual rise since October 2022.

Elsewhere, Americans lined up for unemployment benefits at an accelerated clip in the week ended 6 June, according to the Department of Labor, hitting the highest initial claim count since February. Initial jobless claims rose by by 4,000 to 229,000, firmly ahead of market expectations of a decrease to 219,000. Elsewhere, continuing claims slipped by 24,000 to 1.79m, while the four-week moving average, which aims to strip out week-to-week volatility, increased by 4,750 to 1.78m. The advance seasonally adjusted insured unemployment rate was unchanged at 1.2%.

In the corporate space, Adobe and Lennar were both slated to report earnings after the close.

Reporting by Iain Gilbert at Sharecast.com