Stocks Rise Toward Record as Iran Peace Hopes Hold: Markets Wrap

(Bloomberg) — Wall Street kicked off the holiday-shortened week with stocks joining bonds higher as hopes for a peace deal between the US and Iran overshadowed military strikes in the Persian Gulf.

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Expectations of an agreement drove the S&P 500 toward a record, with chipmakers leading the charge. Treasury yields fell as concerns over a flare-up in inflation eased, making traders pare back their wagers on near-term Federal Reserve rate hikes. The latest Middle East developments left the oil market volatile. Brent rose to around $100 after sinking more than 7% Monday.

The US is touting progress toward a deal to end the nearly three-month war, with President Donald Trump saying talks to extend a ceasefire and reopen the Strait of Hormuz are proceeding. Secretary of State Marco Rubio cautioned that any accord would likely take a few days to finalize.

Security in the energy waterway remained unclear after the two sides exchanged strikes overnight and US Central Command pushed back on reports that suggested the military was helping escort vessels.

“Market participants are placing their bets on peace and subsequently buying into very strong equity fundamentals,” said Kyle Rodda at Capital.com.

“While we’d like to share the optimism, there have been enough setbacks in the process of crafting an agreement between Washington and Tehran that we’ll remain cautious until there is more tangible progress,” said Ian Lyngen at BMO Capital Markets.

Traders shouldn’t expect a deal to immediately send the S&P 500 running to 8,000, but the reality is that removing distractions would allow investors to focus on earnings and growth, boosting the market potential, according to Tom Essaye at The Sevens Report. The gauge traded slightly above 7,500.

“Just because a ceasefire isn’t an immediate catalyst, it will still be a steady positive influence on stocks and bonds — as long as growth stays solid and inflation doesn’t spike,” he added.

On the economic front, data showed US consumer confidence edged down in May as views of current economic conditions settled back amid rising prices due to the war. The Conference Board’s gauge fell to 93.1 after an upward revision to the prior month. The median economist estimate was 92.

“Given the current pricing pressures, we would have expected a more dramatic decline in confidence,” said Jeffrey Roach at LPL Financial. “However, consumers feel the employment situation will improve by the end of the year.”

Corporate Highlights:

• Micron Technology Inc. jumped after UBS Group AG raised its price target on the chipmaker to a Street-high view of $1,625.

• Qualcomm Inc. reached a deal with TikTok owner ByteDance Ltd. to supply chips for artificial-intelligence data centers, according to people familiar with the matter, marking a key win for a company trying to expand from smartphone processors into AI infrastructure.

• Space and satellite-related stocks rallied as investor enthusiasm around the industry intensified after Elon Musk’s SpaceX filed for a public offering last week.

• Eli Lilly & Co. is on a record spending spree, announcing acquisitions worth more than $20 billion so far in 2026 as the drugmaker expands beyond its blockbuster obesity franchise.

• BP Plc fired Chairman Albert Manifold just months into the job over serious concerns about “governance standards, oversight and conduct,” in a surprise move that prolongs a period of turmoil at the UK oil major.

Some of the main moves in markets:

Stocks

• The S&P 500 rose 0.5% as of 1:45 p.m. New York time

• The Nasdaq 100 rose 1.5%

• The Dow Jones Industrial Average fell 0.4%

• The MSCI World Index rose 0.1%

Currencies

• The Bloomberg Dollar Spot Index rose 0.2%

• The euro fell 0.2% to $1.1623

• The British pound fell 0.5% to $1.3440

• The Japanese yen fell 0.3% to 159.34 per dollar

Cryptocurrencies

• Bitcoin fell 1.7% to $75,905.6

• Ether fell 2.1% to $2,063.95

Bonds

• The yield on 10-year Treasuries declined five basis points to 4.50%

• Germany’s 10-year yield advanced three basis points to 2.98%

• Britain’s 10-year yield declined two basis points to 4.88%

Commodities

• West Texas Intermediate crude fell 3.1% to $93.60 a barrel

• Spot gold fell 1.5% to $4,500.56 an ounce

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