2026.5.6 US Stock Daily | Oil Crashes 7%, Nasdaq and S&P Hit New Highs

WTI crude dropping 7.03% to $95.08 in a single session is the origin point of everything that happened today.

Bloomberg’s headline handed the market its narrative: “Global Stock Rally Builds on Iran Deal Optimism.” The market is betting the US-Iran conflict is nearing its end, and crude took a seven-percentage-point hit. Polymarket’s pricing is more specific: 16% probability of a permanent US-Iran deal by May 15, 28% by end of May, 50-50 by end of June; only 4% chance the Strait of Hormuz returns to normal transit by May 15, 30% by end of May, 54% by end of June. The market is willing to price in “deal in sight” expectations, but remains cautious about the actual timeline for shipping lanes reopening.

The oil plunge flipped risk appetite directly. Nasdaq closed at 25,838.94, up 2.02%; S&P at 7,365.12, up 1.46%—both all-time highs. Dow rose 1.24% to 49,910.59. The 10-year Treasury yield fell about 6bp to 4.36%, and the dollar index dropped to 98.02. VIX settled at 17.4, barely moving—the options market isn’t charging extra for this rally.

Sector rotation was textbook oil-price trading. Energy XLE fell 4.12%, dead last; Tech XLK led at +2.66%, followed by Industrials XLI +2.59% and Consumer Discretionary XLY +1.52%. Lower oil means lower manufacturing cost expectations, easing inflation pressure, and wider room for rate cuts—money rotated out of energy into growth and cyclicals. Utilities XLU fell 1.42%, Healthcare XLV gained just 0.07%—both defensive sectors were conspicuously absent today as capital piled into risk one-sidedly.

AMD was the undisputed single-stock protagonist, closing up 18.61% at $421.39 after gapping up 14.5% pre-market, with 87.73 million shares traded. Nvidia followed with +5.77% to $207.83, Google +2.47%, Tesla +2.40%. The entire AI compute chain got lifted today. But AMD already pulled back 1.5% after hours—whether it holds the $400 level tomorrow is the litmus test for this leg of short-term momentum.

Back to oil. Crude’s months-long climb had been threatening the rate-cut narrative—any further rise would have essentially killed any chance of cuts this year. Releasing “deal is close” signals at precisely this juncture inflicts far more damage on speculative longs than the diplomatic substance of any actual agreement warrants—the cost of a few sentences is virtually zero. This is expectations management, not a diplomatic breakthrough.

Two things to watch. First, Iran’s actual response. Polymarket has already set the market’s baseline in probability terms, but price action will jump on every concrete headline—if the framework is accepted, WTI could drift toward $90; rejection or delay means a quick snap back above $100, giving back most of today’s gains. Second, whether the AI chain can sustain today’s momentum. AMD is the leader—if it holds $400 tomorrow, the semiconductor sector has more to give.