Wall Street opened higher on Friday as investors weighed reports of a possible agreement between the United States and Iran alongside continued optimism surrounding artificial intelligence-driven earnings growth.
The Dow Jones Industrial Average rose about 169 points, or 0.33%, while the S&P 500 and Nasdaq Composite gained 0.24% and 0.29%, respectively.
The cautious gains followed another record-setting session for US equities on Thursday, with the major indexes continuing a rally fueled by strong technology earnings and easing concerns surrounding Middle East tensions.
According to Reuters sources, Washington and Tehran agreed to extend their ceasefire and remove restrictions on shipping through the Strait of Hormuz, although President Donald Trump had not yet approved the arrangement.
Markets reacted positively to the possibility that tensions in the region could remain contained after weeks of uncertainty surrounding the conflict and its potential impact on global energy markets and inflation.
Oil prices ease as ceasefire hopes improve sentiment
Crude oil prices moved lower on Friday as investors monitored developments around the proposed ceasefire extension.
West Texas Intermediate crude futures fell roughly 1% to around $87 per barrel, while Brent crude futures also dropped about 1% to near $91 per barrel.
The decline followed reports that Iran’s armed forces launched missiles late Thursday while Trump considered extending the ceasefire framework.
Markets have remained highly sensitive to developments involving the Strait of Hormuz due to its importance for global oil shipments.
Despite the geopolitical uncertainty, investors appeared increasingly focused on corporate earnings and AI-related growth trends.
AI enthusiasm and earnings continue supporting stocks
Technology stocks continued leading the market higher as investors rewarded companies tied to AI infrastructure and computing demand.
Dell Technologies surged more than 31% in trading after raising its full-year profit and revenue forecasts following stronger-than-expected quarterly results.
The gains also lifted other AI-related infrastructure companies. Hewlett Packard Enterprise climbed 9%, while Super Micro Computer advanced 10%.
Okta also rose more than 18% after posting first-quarter revenue above expectations.
The S&P 500 remained on track for a ninth consecutive weekly gain, its longest winning streak since December 2023.
All three major indexes were also poised to post a second straight monthly gain, with the Nasdaq Composite leading performance for May with an advance of roughly 8%.
Fed outlook remains in focus after inflation data
Investors also continued digesting recent US economic data and comments from Federal Reserve officials.
Data released Thursday showed inflation rose at its fastest pace in three years during April, while first-quarter GDP growth was revised lower to an annualized pace of 1.6%.
Federal Reserve policymakers have recently warned that interest rates may need to remain elevated if inflation pressures do not ease further.
Money markets currently expect the Fed to leave rates unchanged for most of the year, though some investors still anticipate the possibility of a 25-basis-point increase in December.
Market participants are expected to closely monitor comments from Fed officials Anna Paulson, Neel Kashkari, and Mary Daly for further clues on the direction of monetary policy.
Outside technology, Gap shares fell 16.6% after the apparel retailer lowered its annual sales forecast, while American Eagle Outfitters dropped 15% after maintaining its comparable sales outlook unchanged.
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