U.S. stocks climbed on Thursday with the S&P 500 and Nasdaq achieving record highs, following reports of a U.S.-Iran agreement to extend a ceasefire and initiate negotiations. This development provided a positive backdrop amid recent geopolitical tensions.
The S&P 500 rose 43.42 points, or 0.58%, to 7,563.78, and the Nasdaq Composite increased 242.74 points, or 0.91%, to 26,917.47, marking their third consecutive record closing highs. Meanwhile, the Dow Jones Industrial Average gained 25.49 points, or 0.05%, to 50,669.77. European shares, although off session lows, closed lower due to the ongoing geopolitical uncertainties.
The reported memorandum of understanding between the United States and Iran extends the truce for another 60 days, allowing for negotiations. However, this agreement still requires the approval of U.S. President Donald Trump. The news follows recent military actions, including Iran targeting a U.S. air base in Kuwait and a U.S. strike on an Iranian drone complex near the Strait of Hormuz.
“What the numbers point to today is simply that we have a stagflation problem, and that's a big problem for the Fed.”
Peter Cardillo, chief market economist at Spartan Capital Securities
Economic data released showed that U.S. GDP growth for the first quarter was slower than initially reported, with the saving rate at its lowest since June 2022. Inflation continued to rise, and new orders for core-capital goods, a key indicator of corporate spending plans, unexpectedly fell.
The weaker GDP and rising inflation present a challenge for the Federal Reserve under Chairman Kevin Warsh, as it navigates monetary policy decisions. "What the numbers point to today is simply that we have a stagflation problem, and that's a big problem for the Fed," said Peter Cardillo, chief market economist at Spartan Capital Securities.
Oil prices showed mixed movements, with U.S. crude rising 0.25% to $88.90 per barrel, while Brent fell 0.62% to $93.71 per barrel. U.S. Treasury yields declined following the economic data and the potential interim deal in the Iran conflict.
Background
The geopolitical developments between the U.S. and Iran come at a time of heightened market volatility, driven by concerns over Middle Eastern tensions. The extension of the ceasefire provides a temporary relief, but the situation remains fluid.
Looking ahead, investors will closely monitor the approval process of the U.S.-Iran agreement and its potential impact on global markets. Additionally, the Federal Reserve's response to the economic indicators will be crucial as it balances growth and inflation concerns.
