US stocks surged on Thursday as investors welcomed signs of easing geopolitical tensions in the Middle East and a sharp rebound in semiconductor stocks. The rally marked the strongest single-day advance for the major indexes since April, driven by improved risk appetite and relief over potential diplomatic progress. The S&P 500 climbed 1.75% to close at 7,394.30, recovering much of the prior session's losses after President Donald Trump signaled that a peace agreement with Iran could be signed soon. Polymarket traders are betting the benchmark index will extend these gains at Friday's open, with the June 12 contract implying an 83% probability of a higher open.

Market Indices Performance

The major indices posted significant gains, with technology and semiconductor stocks leading the recovery. The iShares Semiconductor ETF (NASDAQ: SOXX) gained more than 8%, recording its strongest one-day gain in over a year. Key chip movers included Micron Technology Inc. (NASDAQ: MU), Advanced Micro Devices Inc. (NASDAQ: AMD), and Intel Corp. (NASDAQ: INTC).

Geopolitical and Economic Drivers

Investor sentiment improved sharply after President Trump announced that planned military strikes against Iran had been canceled amid reports of progress toward a potential diplomatic agreement. The president told reporters that a signing was expected soon and that the agreement would ensure Iran never obtains a nuclear weapon. Hope that the Strait of Hormuz could eventually reopen to normal shipping traffic helped drive oil prices lower and eased concerns about additional inflationary pressure from energy markets.

However, economic data released Thursday showed Producer Price Index (PPI) inflation rose more than expected in May. The report signaled that price pressures remain elevated despite recent signs of moderation elsewhere in the economy, tempering expectations for near-term Federal Reserve rate cuts.

Sector Moves and IPO Activity

Technology and semiconductor stocks led the market higher following several days of heavy selling, as investors returned to AI and chip-related names. Despite the broader rally, Oracle Corp. (NYSE: ORCL) shares fell 8% on Thursday after announcing plans to raise an additional $20 billion to fund its artificial intelligence expansion, highlighting growing investor scrutiny of AI-related spending.

Attention is now shifting to SpaceX's highly anticipated Nasdaq debut. The company is set to raise $75 billion at a valuation of approximately $1.77 trillion, making it the largest IPO in history. S&P 500 futures were up about 0.18% early Friday.