U.S. Stock Market Close | Israel-Lebanon Ceasefire Agreement Boosts Market Sentiment; Nasdaq Achieves Twelfth Consecutive Gain, Hitting New High; Lithium Mining Stocks Surge Across the Board, Albemarle Corporation Soars 16%; Crude Oil Rises for Second Day

Despite concerns over the timeline of the Middle East ceasefire agreement and geopolitical risks, U.S. stocks closed slightly higher, with the S&P 500 and Nasdaq reaching new highs led by technology stocks. Both crude oil and U.S. Treasury yields rose.

According to reports from Xinhua News Agency, Trump stated that Lebanon and Israel would implement a 10-day ceasefire. This statement boosted market sentiment, expanding the gains of the two major U.S. stock indices, the S&P 500 and Nasdaq, which continued to set new intraday records. The Dow Jones Industrial Average, which turned slightly positive in early trading, also expanded its gains marginally.

Subsequent reports indicated that it might take approximately six months for the U.S. and Iran to reach a formal agreement. Weighed down by this news, U.S. indices briefly turned negative but ultimately closed slightly higher due to bargain hunting, with both the S&P 500 and Nasdaq marking their second consecutive day of closing at record highs.

Several market observers have questioned the sustainability of the current rally. Michael Bell, Head of Strategy at RBC BlueBay Asset Management, commented:

Investors have developed a conditioned reflex to buy on dips, but whether the Strait of Hormuz can reopen soon remains a question. The market is already pricing in an optimistic scenario, and upside potential may be limited.

The Nasdaq has risen for 12 consecutive trading days, marking its longest winning streak since July 2017. Goldman Sachs noted that the index’s performance from the beginning of April until now represents its best start to a month since July 2013.

Goldman Sachs’ trading desk highlighted that a ‘short squeeze’ remains the dominant theme in the stock market. High-beta loss-making stocks, non-profitable tech firms, and heavily shorted stocks have all seen concentrated buying over the past 12 months.

Brian Garrett of Goldman Sachs pointed out that over the past five trading days, the scale of buying demand from Commodity Trading Advisors (CTAs) reached one of the largest levels on record. Meanwhile, panic buying emerged in quantum computing stocks and meme stocks, with the latter having surged more than 30% cumulatively in recent days.

Jim Reid, an analyst at Deutsche Bank, noted that the pace of this rebound slightly exceeded the recovery following last year’s so-called ‘reciprocal tariff’ period, during which the S&P 500 gained approximately 10.1% within the same timeframe.

Since the turn of the century, the S&P 500 has recorded gains of over 10% within an 11-trading-day window only 15 times, occurring roughly once every two years on average.

Bloomberg macro strategist Sebastian Boyd pointed out that new highs in the stock market do not mean risks have returned to the levels seen at the beginning of the year. Sebastian Boyd believes:

Investors seem to be underestimating how high the risk premium should be in the current world.

Crude oil prices fluctuated higher, with West Texas Intermediate (WTI) crude rising by as much as 5% during the day before quickly retreating. Brent crude futures for June settled at $99.39 per barrel.

Despite the rise in crude oil futures on the day, physical crude oil, represented by the spot Brent price, actually fell again, indicating that supply and demand pressures in the spot market are not synchronized with movements in the futures market.

Former Treasury Secretary Henry Paulson’s remarks on Thursday drew widespread attention. Speaking on a Bloomberg Television program, he stated that if the U.S. were to face a sovereign debt crisis where the Federal Reserve became the sole buyer of government bonds, an emergency contingency plan to ‘break the deadlock’ must be prepared in advance.

He warned:

When we hit that wall, it will be extremely devastating. We must prepare for this possibility.

Henry Paulson noted that a potential U.S. public debt crisis differs fundamentally from the credit crises of two decades ago, as the government would lack sufficient fiscal flexibility to address the aftermath.

The U.S. Treasury market continued to diverge from equity markets. The yield on the 10-year Treasury note rose approximately 3 basis points to 4.31%, while prices of high-yield corporate bonds remained far below recent highs.

Market expectations for Federal Reserve policy have tilted slightly hawkish, but expectations for rate cuts throughout the year remain dominant.

On Thursday, the three major U.S. stock indexes closed slightly higher. The Nasdaq 100 Index extended its winning streak to 12 days. The Chinese concept index outperformed the broader market.

U.S. benchmark indices:

• The S&P 500 Index rose by 18.33 points, or 0.26%, to close at 7041.28 points.

• The Dow Jones Industrial Average gained 115.00 points, or 0.24%, closing at 48578.72 points.

• The Nasdaq Composite Index increased by 86.687 points, or 0.36%, to close at 24102.704 points. The Nasdaq 100 Index advanced by 128.42 points, or 0.49%, ending at 26333.00 points.

• The Russell 2000 Index climbed by 0.22% to 2719.602 points, surpassing its closing level of 2718.765 on January 22 and approaching the day’s high of 2735.104 points.

• The VIX volatility index, also known as the ‘fear gauge,’ fell by 1.27% to close at 17.94.

U.S. sector ETFs:

• U.S. sector ETFs showed mixed performance, with gains of up to 1.47% for energy sector ETFs, technology sector ETFs, global tech index ETFs, and internet index ETFs. In contrast, the banking sector ETF declined by 0.38%, while the healthcare sector ETF dropped by 0.79%.

Mag 7:

• The Wind U.S. Magnificent 7 Tech Stock Index remained largely unchanged, showing minimal movement.

• $Microsoft (MSFT.US)$ Up 2.2%, Meta up 0.79%, Amazon up 0.48%, NVIDIA down 0.26%, Google A down 0.33%, Tesla down 0.78%, Apple down 1.14%.

Chip Stocks:

Chinese Concept Stocks:

• The Nasdaq Golden Dragon China Index closed up 1.74% at 7,192.18 points. After a gap-up opening, it mainly stabilized near the 7,200-point level and reached 7,256.75 points at 00:18 Beijing time.

• Among popular Chinese ADRs, $NIO Inc (NIO.US)$ Up 6.7%, New Oriental Education up 4.8%, Alibaba up 4%, BYD, Xiaomi, Xpeng, and Baidu all up over 3%, Tencent up over 2%.

Other individual stocks:

• Circle up 1.81%.

• Lithium mining stocks performed strongly across the board. $Albemarle (ALB.US)$ A surge of 16%, Sigma Lithium up over 13%, Sociedad Química y Minera de Chile up over 8%.

The German index closed up over 0.3%, while the Italian banking sector fell about 0.8%.

Pan-European stocks:

• The European STOXX 600 Index closed down 0.05% at 616.95 points, hitting a daily high of 620.42 points at 21:32 Beijing time before quickly reversing gains.

• The Eurozone STOXX 50 Index closed down 0.12% at 5933.28 points.

Major Stock Indexes Around the World:

• The German DAX 30 Index rose 0.36% to close at 24154.47 points.

• The French CAC 40 Index fell 0.14% to close at 8262.70 points.

• The UK FTSE 100 Index rose 0.29% to close at 10589.99 points.

The yield on the 30-year U.S. Treasury bond increased by approximately 3.1 basis points. The yield on the two-year German government bond fell by about 3 basis points.

U.S. Treasuries:

• At the New York close, the yield on the 10-year U.S. Treasury note rose 2.38 basis points to 4.3072%. Before 22:00 Beijing time, it remained slightly lower, stabilizing around 4.27%, before continuing to climb.

• The yield on the two-year U.S. Treasury note rose 1.23 basis points to 3.7737%, while the yield on the 30-year U.S. Treasury bond increased by 3.07 basis points to 4.9285%.

European debt:

• In late European trading, Germany’s 10-year government bond yield fell by 1.1 basis points to 3.032%, fluctuating between 3.044% and 2.996% during the day.

• The 10-year government bond yields of France, Italy, Spain, and Greece fell on average by 1.1 basis points.

Abu Dhabi Murban crude oil futures in the Middle East rose by 0.65% to $101.51 per barrel.

Crude Oil:

• WTI crude oil futures for May delivery closed up $3.40, or 3.72%, at $94.69 per barrel.

• Brent crude oil futures for June delivery closed at $99.39 per barrel.

• Abu Dhabi Murban crude oil futures in the Middle East rose by 0.65% to $101.51 per barrel.

Natural Gas:

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Editor/Stephen