S&P 500 Hits Another Record as Oil Finally Gives Equities Some Breathing Room

Tuesday's session was about relief. U.S. stocks rallied into fresh highs as crude pulled back hard on hopes that Washington and Tehran are moving toward a framework for broader talks, easing fears of a prolonged supply shock in the Gulf. The S&P 500 rose 0.81% to a record 7,259.22, the Nasdaq Composite gained 1.03% to a closing high of 25,326.13, and the Dow Jones Industrial Average added 356.35 points, or 0.73%, to 49,298.25, according to CNBC. Bloomberg said stocks were powered higher by technology shares as oil and bond yields fell on optimism around a possible U.S.-Iran deal Bloomberg.

That makes the lead angle clear this morning. This was not another straight AI-only melt-up and it wasn't just a replay of the Apple story from earlier in the week. The more important shift was that the market got a temporary break from the inflation impulse coming out of energy. After Monday's oil scare knocked sentiment, Tuesday's reversal let investors rotate back into growth without having to absorb another jump in headline inflation expectations.

Crude Tumbled, but Treasury Yields Are Still Too High for the Fed to Relax

Oil did the heavy lifting for risk sentiment. CNBC reported West Texas Intermediate crude fell 3.9% to settle at $102.27 a barrel, while Brent dropped 3.99% to $109.87 CNBC. By early Wednesday, the move had extended, with WTI down nearly 9% to around $93 and Brent off 7.7% to near $101 as traders leaned harder into the idea that the Hormuz crisis may not spiral further CNBC.

But bonds are sending a more cautious message than equities. The Federal Reserve's H.15 data showed the 10-year Treasury yield at 4.45% on May 4, up from 4.39% on May 1, while the 2-year stood at 3.95% versus 3.88% the prior session in that release Federal Reserve. In other words, even with oil backing off, yields remain high enough to keep financial conditions restrictive. That's the actionable point for traders: lower crude helps the equity tape, but unless yields break meaningfully lower, the market is still trading with a rate ceiling overhead rather than a clean all-clear from the Fed.

The effective fed funds rate was 3.64% in the same Fed release, underscoring that policy is still firmly restrictive in real terms if energy stops re-accelerating Federal Reserve. That leaves the market highly sensitive to today's labor-cost and productivity data for any sign that sticky wage pressure could offset the disinflationary help from oil.

AMD Stole the Late Show, While Palantir Was a Reminder That Good Isn't Always Good Enough

The biggest single-stock mover that matters for today's open is AMD. The chipmaker beat first-quarter estimates with adjusted EPS of $1.37 against the $1.29 consensus and revenue of $10.25 billion versus $9.89 billion expected. More important, AMD guided for about $11.2 billion in second-quarter revenue, well above the $10.52 billion estimate, sending the stock up about 15% in extended trading CNBC.

The details matter because they reinforce the market's current hierarchy. AMD's data-center revenue jumped 57% to $5.8 billion, and CEO Lisa Su said that business is now the primary driver of revenue and earnings growth CNBC. That helped lift the broader semiconductor complex, with CNBC noting the VanEck Semiconductor ETF rose 3.4% and Intel gained 5.9% in premarket Wednesday after AMD's numbers CNBC.

On the other side of the ledger, Palantir showed how unforgiving this tape has become toward expensive winners. Even after topping expectations and raising guidance, the stock slid as investors focused on whether commercial momentum was strong enough to justify the valuation. CNBC reported Palantir beat on revenue and profit, helped by 84% growth in U.S. government revenue CNBC, while Bloomberg said the miss on U.S. commercial sales overshadowed the stronger outlook Bloomberg. For traders, that's a useful tell: the market still wants AI exposure, but it's rewarding clean upside revisions and punishing anything that looks merely adequate.

Gold Held Up, Crypto Climbed, and the Cross-Asset Message Turned More Risk-On

Gold didn't collapse with oil. Spot prices were still elevated around $4,556 an ounce on May 5, according to USA Today, and Forbes had gold near $4,568 in early Tuesday trading USA Today Forbes Advisor. That combination, weaker oil but firm gold, suggests investors trimmed immediate war-premium fears without fully abandoning hedges against broader geopolitical or inflation risk.

Crypto joined the rebound. Fortune listed Bitcoin at $81,286.38 as of 8:45 a.m. ET on May 5, up 2.92% from the prior day, while Forbes Advisor put Ethereum at roughly $2,388 as of 8:35 a.m. ET Fortune Forbes Advisor. CoinDesk also reported Bitcoin moving back above $80,000 as risk appetite returned CoinDesk. It's not the main market story, but it does fit the broader pattern: Tuesday's tape favored duration, growth and higher-beta risk.

Europe Added an Earnings Angle Overnight as Novo Nordisk Jumped

One stock to keep on the radar even for U.S. traders is Novo Nordisk. Reuters reported Wednesday that the drugmaker beat first-quarter profit forecasts and nudged up its full-year outlook, helped by stronger-than-expected sales of its new Wegovy pill Reuters. Bloomberg said the shares surged as much as 9.2% in Copenhagen after the company indicated this year's declines in sales and profit would not be as severe as previously expected Bloomberg.

That matters because healthcare has lagged the AI leaders, and any sign of renewed earnings credibility from large-cap defensives could broaden the rally if rates stay sticky. If traders start rotating into healthcare winners while semis remain bid, the market's leadership gets healthier and more durable. If not, we're still looking at a narrow growth-led tape that depends heavily on lower oil and stable yields.

Geopolitics Is Still the Swing Factor, Just in the Opposite Direction

The geopolitical driver has not gone away. It has simply flipped from a source of panic to a source of relief. Bloomberg reported that Washington and Tehran are working on a memorandum to frame more detailed nuclear talks, though key points still need agreement Bloomberg. CNBC said President Donald Trump had paused "Project Freedom," the U.S. plan to guide ships through the Strait of Hormuz, citing progress toward a "Complete and Final Agreement" with Iran CNBC.

That's why traders shouldn't overread Tuesday's calm. The market is now priced for de-escalation, at least tactically. If the diplomacy stalls or shipping risk in Hormuz flares again, oil can snap back fast and drag yields and equities with it. The relief rally is real, but so is the headline risk.

What to Watch Today

U.S. productivity and unit labor costs data. With the 10-year yield still around 4.45% in the latest Fed daily data, any upside surprise in labor costs could keep rate-cut hopes in check Federal Reserve.
AMD's cash-session reaction after its blowout report and guidance. Watch whether the gain broadens across semis or fades into profit-taking CNBC.
Oil around the $100 Brent level and the low-$90s area in WTI. That's the cleanest real-time read on whether the market still believes in a U.S.-Iran off-ramp CNBC.
Whether Palantir's post-earnings weakness spills into other high-multiple software names, or remains company-specific CNBC Bloomberg.
Bitcoin above $80,000. If crypto holds that breakout while stocks and semis extend gains, it would reinforce the risk-on tone across asset classes Fortune CoinDesk.