The Major Markets moved higher for the holiday-shortened week as easing geopolitical tensions and continued enthusiasm around artificial intelligence outweighed a surprisingly hawkish Federal Reserve meeting.

The Nasdaq rose 2.4%, the S&P 500 gained 0.9%, and the Dow added 0.7%. Again, small cap blend outpaced Large Cap blend as the Russell 2000 climbed 1.2%, with both the Dow and Russell reaching record highs.

AI optimism was evident in the PHLX Semiconductor Index. The index surged 7.3% as investors remained bullish on AI-related spending and memory chip demand.

Midweek, the Fed left interest rates unchanged but signaled a higher-for-longer stance on inflation, causing a brief selloff. Furthermore, in his first FOMC Meeting, Fed Chair Kevin Warsh announced changes to how the committee will be operating going forward.

“On that score, you might have already noticed something: a difference in today’s policy statement. It’s a bit shorter, a bit simpler—and it dispenses with some older language.

That statement just gives you the facts, as best we can judge it. Absent, also, is so-called “forward guidance,” which we agreed was not well-suited to the current policy conjuncture.” This marks a substantive change from the Bernanke era where Fed policy has been largely telegraphed ahead of time.

A major boost came from a U.S.-Iran agreement that reopened the Strait of Hormuz and eased concerns about global energy supplies . As a result, oil prices fell more than 10% for the week, helping reduce inflation worries and supporting economically sensitive areas like homebuilders, airlines, and industrial stocks.

Sector leadership came from Technology, up 3.1%, and Industrials, up 2.6%, while Energy lagged, falling 6.6% as oil prices declined.