U.S. stocks displayed a mixed performance during Wednesday's early session, with the Nasdaq Composite experiencing a slight decline. Oil prices fell amid hopes for a ceasefire between the U.S. and Iran.

The Dow Jones Industrial Average rose by 274.34 points, or 0.54%, to 50,736.02. The Nasdaq Composite fell by 38.84 points, or 0.15%, to 26,617.34. The S&P 500 index gained 2.93 points, or 0.04%, reaching 7,522.05.

Micron Technology's stock continued its upward trajectory on Wednesday, extending its previous significant rally. The stock surged 19.3% on Tuesday, pushing its market capitalization above the $1 trillion mark for the first time.

Wall Street analysts are broadly optimistic about the stock's prospects. UBS is particularly bullish, suggesting that the benefits from its long-term agreements could drive the stock price to more than double. Despite an initial dip last week due to sector-wide selling in memory chips, Micron ended the week with notable gains.

Additionally, it was reported that on May 22nd, during a large rally in New York, the U.S. President publicly praised Micron Technology, calling it "really great." Notably, just hours before the rally began, the options market saw several large bullish bets on Micron. The most aggressive was a contract with a $1,400 strike price expiring in January 2027, involving a single premium exceeding $1.41 million. This implies that Micron's stock price would need to rise nearly 90% from around $745 in less than eight months for the investor to profit.

Investors are increasingly viewing memory chip manufacturers as a primary way to participate in the artificial intelligence bull market. Micron's South Korean peer, SK Hynix, also recently achieved a $1 trillion market capitalization.

Micron's stock price has more than tripled this year. It received a further boost on Tuesday after UBS stated the stock still has the potential to more than double as memory suppliers sign long-term agreements to advance AI applications.

However, some strategists have expressed concern about narrowing market breadth. Matt Stucky, Chief Equity Portfolio Manager at Northwestern Mutual Wealth Management, noted that the percentage of companies outperforming the S&P 500 has plummeted from 65% at the start of the year to just 24% since the Iran conflict. He stated, "When the market becomes more narrow, as an investor you begin to question the durability and resilience of that market."

Previous Session Review: Tech Stocks and Dow Diverge In the previous session, gains in the technology sector propelled the S&P 500 and the tech-heavy Nasdaq Composite to new intraday and closing highs. The S&P 500 rose 0.61%, and the Nasdaq jumped 1.19%, while the blue-chip Dow Jones Industrial Average fell 118.02 points, or 0.23%.

Geopolitical Outlook: Oil Prices Dip on Hopes, Analysts Divided Investors were also encouraged by comments from the U.S. President, who stated that talks to end the war with Iran were "going well." Although the U.S. conducted a "self-defense" strike in southern Iran early Tuesday, Central Command spokesperson Tim Hawkins said the U.S. showed restraint during an "ongoing ceasefire period" between the two countries.

U.S. crude oil prices fell approximately 6% in pre-market trading Wednesday following reports that Iran would resume transit through the Strait of Hormuz as part of a framework agreement with the United States.

As of 8:33 a.m. ET, West Texas Intermediate crude futures were down 5.7% to $88.53 per barrel. The international benchmark Brent crude fell about 4.7% to $94.91 per barrel.

According to reports from Iranian state television, Tehran has committed to restoring commercial traffic through the Strait of Hormuz to pre-war levels within one month of reaching a deal with the U.S.

However, Iranian state TV also reported that Iran would cooperate with Oman to manage ship traffic through the strait. The report added that U.S. forces would withdraw from near Iran and lift a maritime blockade.

Expectations of easing tensions with Iran, coupled with a strong earnings season, have driven the stock market to record highs this month. However, Drew Pettit, U.S. equity strategist at Citigroup, believes there is limited room for further gains.

He stated, "We have high yields right now, with the U.S. 10-year Treasury yield around 4.50%, inflation expectations are moving higher, and the yield curve has actually flattened this year. All of these factors are not supportive of sustainably higher valuation multiples from here." Pettit's year-end target for the S&P 500 is 7,700, implying only a modest 2% upside from current levels.

Goldman Sachs holds a different view. The firm raised its year-end target for the S&P 500 from 7,600 to 8,000 late Tuesday, citing expectations for continued strong earnings growth even amid some geopolitical headwinds.