What happened: Western Digital (WDC) stock jumped 7% on Tuesday.
What’s behind the move: The data storage company extended gains from Monday, when the stock surged 16% after Morgan Stanley raised its price target and maintained an Overweight rating on the stock. The firm’s new price target is $650, up from $488.
Western Digital bucked the trend as other memory and storage makers retreated from record highs. Western Digital, Micron Technology, and storage maker Sandisk were among 30 S&P 500 (^GSPC) stocks that closed at record highs on Monday. Chipmaker AMD (AMD) also reached an all-time high before reversing gains on Tuesday.
What else you need to know: The AI trade returned to the spotlight this week as stocks rallied Monday following the announcement of a US-Iran peace agreement aimed at ending hostilities in the Middle East and reopening the Strait of Hormuz.
Investors bet that the Federal Reserve could look through the recent energy-driven inflation shock if the Strait of Hormuz reopens and oil shipments resume through the critical waterway.
Wall Street has debated whether policymakers will adopt a more hawkish tone at this week’s meeting and whether the recent rise in energy prices could even revive the possibility of rate hikes after markets had largely been expecting rate cuts.
Goldman Sachs analysts have pushed back their forecast for the next round of rate cuts, now expecting them to begin in the second half of next year.
