U.S. Stocks Rally After Reports of Pending U.S.-Iran Agreement
U.S. stock markets moved sharply higher on Thursday after reports suggested Washington and Tehran had reached a preliminary agreement to extend the current ceasefire and continue negotiations over Iran’s nuclear program.
According to the reports, the proposed agreement is still awaiting final approval from U.S. President Donald Trump.
The news boosted investor sentiment and helped major Wall Street indexes rebound despite ongoing geopolitical tensions in the Middle East.
S&P 500 and Nasdaq Move Higher
Earlier in the session, markets traded mostly flat as investors analyzed a fresh batch of U.S. economic data and monitored renewed military activity in the Gulf region.
By 10:16 ET (14:16 GMT), the S&P 500 had gained 0.4% to 7,546.42 points, while the Nasdaq Composite also climbed 0.4% to 26,775.35 points. The Dow Jones Industrial Average was little changed at 50,644.27 points.
Investors appeared encouraged by reports that diplomatic negotiations between the United States and Iran could still move forward despite fresh military exchanges.
Core PCE Inflation Hits Highest Level Since 2023
Markets were also closely watching new inflation data released by the U.S. Bureau of Economic Analysis.
The Core Personal Consumption Expenditures (PCE) Price Index — the Federal Reserve’s preferred inflation gauge — rose 3.3% year-over-year in April. The reading marked the highest level since November 2023 and remained well above the Fed’s 2% inflation target.
Headline PCE inflation increased 3.8% annually, reaching its fastest pace since May 2023. However, both readings matched analyst expectations.
On a monthly basis, core PCE rose 0.2%, slowing from March’s 0.3% increase and coming in slightly below forecasts.
Rising Oil Prices Continue to Pressure Markets
The latest inflation data comes as oil prices remain elevated due to the ongoing conflict involving Iran.
According to data from the U.S. Energy Information Administration, gasoline prices in the United States have surged more than 50% since the conflict began at the end of February.
Oil markets remained volatile on Thursday after renewed military strikes between the U.S. and Iran raised concerns about disruptions to global energy supplies.
Brent crude was last trading 2.3% higher at $94.46 per barrel.
Fresh U.S.-Iran Strikes Keep Investors on Edge
The U.S. military reportedly struck targets near the Iranian city of Bandar Abbas earlier in the day.
In response, Iran’s Islamic Revolutionary Guard Corps claimed responsibility for attacks targeting a U.S. military base in Kuwait. Kuwaiti officials also confirmed they were defending against drone and missile attacks.
Reuters additionally reported that U.S. forces intercepted four Iranian drones and struck a ground control station in Bandar Abbas.
Despite the renewed escalation, U.S. officials stated that the military actions were carried out in self-defense and maintained that the ceasefire agreement with Iran technically remained active.
Wall Street Watches Corporate Earnings
In corporate news, HP shares moved lower despite issuing profit guidance that exceeded expectations for the current quarter.
Salesforce also declined after providing weaker-than-expected revenue guidance.
Meanwhile, Marvell Technology recovered from premarket losses following its first-quarter earnings report.
Drone-related stocks such as Unusual Machines and AeroVironment posted strong gains after reports that the U.S. administration was discussing potential funding support for the sector.
Investors Remain Focused on Middle East Developments
Analysts noted that investors continue to monitor developments in the Middle East closely, hoping negotiations between Washington and Tehran can eventually lead to a more stable outcome.
However, continued military exchanges and uncertainty surrounding the Strait of Hormuz are still contributing to lower trading volumes and elevated market caution.
