Wall Street snapped a two-day losing streak on Thursday, propelled by a dramatic rally in semiconductor shares and a sharp drop in oil prices after Washington and Tehran signed an interim agreement extending their April ceasefire by 60 days. The Philadelphia semiconductor index surged 6.4 per cent, with Intel shares vaulting more than 10 per cent to a record high after President Donald Trump announced that Apple had agreed to design and manufacture chips with Intel on American soil. The broader S&P 500 added roughly 1 per cent, clawing back losses triggered a day earlier by a more hawkish-than-expected Federal Reserve.

The rally drew equal strength from the energy market, where crude slid to its lowest level since early March. The US-Iran deal, however fragile, allowed the first commercial vessels in weeks to transit the Strait of Hormuz, the narrow chokepoint through which much of the world’s oil, gas and fertiliser flows. That passage had been severely disrupted since the outbreak of war in late February, sending fuel costs spiralling and embedding an inflation premium in asset prices. Trump warned that attacks would resume if Iran failed to honour its commitments, but for a session at least, traders focused on the tangible restart of shipping rather than the conditional nature of the truce.

Viewed from Washington, the accord is a calculated gamble to buy time for a final settlement while keeping military pressure in reserve. On Wall Street, the twin catalysts of cheaper energy and a landmark tech partnership proved potent enough to offset the lingering unease over monetary policy. In European trading, however, the response was more muted. Bourses on the continent were flat to marginally higher, with Paris adding 0.14 per cent and Frankfurt barely positive, as they absorbed the Fed’s stance with a day’s delay. London’s FTSE 100 fell 1.21 per cent, weighed down by commodity-linked stocks that suffered from the oil price decline.

The Fed, under new chair Kevin Warsh, had spooked investors by underscoring the need to curb inflation and signalling that borrowing costs could stay elevated. Markets now price a 50 per cent chance of a quarter-point rate rise in September, but UBS Global Wealth Management’s chief investment officer Mark Haefele argued that the combination of a new regime, hawkish projections and wide dispersion of views “implies a higher bar for near-term action in either direction,” pointing to an extended hold until a task force process delivers greater clarity on the economic outlook. The drop in oil, if sustained, would ease a key inflationary impulse, potentially validating that patient approach.

The coming 60 days will test both the geopolitical and monetary policy narratives. A final US-Iran deal would remove a major risk premium from global markets, while any breakdown could swiftly reignite the oil price surge and revive the inflation scare that has haunted central banks. For now, the sight of tankers moving through Hormuz and the prospect of reshored chip manufacturing have given investors permission to look past the Fed’s hawkish rhetoric. Whether that optimism endures depends on diplomats in Geneva and data releases in Washington over the weeks ahead.