Stocks Surge as Falling Oil Prices Ignite Broad-Based Rally Ahead of SpaceX IPO

The stock market delivered an impressive rebound as easing geopolitical tensions and a sharp decline in oil prices fueled broad-based buying across nearly every major sector. The S&P 500 climbed 1.8%, the Nasdaq Composite surged 2.5%, and the Dow Jones Industrial Average advanced 1.9%, with all three indices finishing near their highs of the day.

Trading began on a constructive note following the release of the May Producer Price Index. While headline PPI rose 1.1%, above expectations, investors took some comfort from downward revisions to April’s figures. Core PPI matched forecasts at 0.4% and also benefited from a downward revision to the prior month, helping keep inflation concerns in check.

Despite the encouraging start, trading remained choppy through much of the morning. Semiconductor stocks attracted bargain hunters after several sessions of weakness, but many large-cap technology and growth names struggled to gain traction. Oracle weighed on sentiment after issuing disappointing guidance despite reporting earnings that exceeded expectations, while Alphabet and NVIDIA both spent portions of the session in negative territory.

The market’s tone shifted dramatically during the early afternoon after geopolitical headlines sparked a sharp decline in oil prices. President Trump announced that a planned round of military strikes against Iran had been canceled due to progress toward a diplomatic agreement. Additional reports suggested that a memorandum of understanding between the United States and Iran could be signed early next week, creating a pathway toward longer-term negotiations.

The news sent crude oil sharply lower, with WTI futures falling 2.4% to settle at $87.81 per barrel. The retreat in energy prices quickly improved risk appetite and triggered a powerful rally across equities.

Technology stocks led the advance, with the information technology sector soaring 2.9%. Semiconductor shares staged a particularly strong rebound, driving the Philadelphia Semiconductor Index 7.9% higher. Memory stocks were among the session’s biggest winners, while semiconductor equipment manufacturers also posted impressive double-digit gains as investors rushed back into AI-related and growth-oriented names.

Industrials matched technology’s strength, rising 3.3%. Airlines benefited significantly from lower fuel costs, while electrical equipment companies rallied alongside semiconductor stocks. Materials also gained 3.3% on broad-based strength.

Consumer discretionary stocks advanced 2.4%, supported by strong performances from cruise operators, homebuilders, and major growth names. Tesla led the sector’s large-cap performers, while the broader appetite for risk helped push the Vanguard Mega Cap Growth ETF up 1.8%.

The rally extended well beyond large-cap technology. Small- and mid-cap stocks outperformed as falling oil prices and lower interest rates improved the outlook for economically sensitive sectors. The Russell 2000 jumped 3.0%, while the S&P MidCap 400 gained 2.6%.

Only a handful of sectors finished lower. Energy stocks declined 2.1% as falling crude prices pressured the group, while consumer staples slipped 0.5% after attracting strong defensive inflows in recent sessions. Real estate finished essentially flat.

The session marked a notable shift in market sentiment. What began as a constructive but cautious trading day evolved into a powerful risk-on rally as easing geopolitical concerns removed a significant source of pressure from both oil prices and interest rates. Investors now turn their attention to Friday’s highly anticipated SpaceX IPO, which continues to generate excitement across aerospace, defense, and space-related stocks. According to regulatory filings, SpaceX plans to offer 555.6 million shares at $135 per share, making it one of the most closely watched public debuts in recent years.

With major averages entering the final trading day of the week carrying strong momentum and market breadth expanding meaningfully, investors will be watching closely to see whether the rally can extend further as earnings, inflation data, and the SpaceX debut continue to shape market sentiment.

Our FTinvest 11 model portfolio rebounded strongly, gaining 1.64% to close at 998.44, recovering much of the previous session’s decline and moving back toward the important 1,000 level. The advance represents the portfolio’s strongest daily gain in more than a week and suggests improving sentiment following the recent period of weakness.

While the portfolio remains below its all-time high of 1,078.93, today’s recovery demonstrates resilience in the face of recent volatility. FTinvest 11 is now up approximately 7.57% year-to-date, restoring a meaningful portion of the gains lost during the recent pullback. Although liquidity concerns surrounding one portfolio component continue to weigh on overall performance, the portfolio showed encouraging strength, highlighting the benefits of diversification and a disciplined, value-driven investment approach.