The S&P 500 Index ($SPX) (SPY) closed up +0.58% on Thursday, while the Dow Jones Industrial Average ($DOWI) (DIA) closed up +0.05% and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.84%.
June E-mini S&P futures (ESM26) rose +0.59% and June E-mini Nasdaq futures (NQM26) rose +0.88%, extending the day’s broad market gains.
Stock indexes recovered from early losses to settle higher, with the S&P 500 and Nasdaq 100 both reaching new all-time highs by the close of trading.
Markets rebounded after Axios reported that the US and Iran reached a deal to extend the ceasefire for sixty days, with negotiations set to begin on Iran’s nuclear program pending President Trump’s approval of the terms.
The reported memorandum of understanding would designate shipping through the Strait of Hormuz as “unrestricted,” with Iran required to remove all mines from the strait within 30 days.
Crude oil prices surrendered a +3% advance on the ceasefire extension news, finishing only slightly higher on the day after initially surging on fresh military developments.
Stocks had initially moved lower after US forces struck Iranian military targets for the second time this week, with Kuwait also reporting it responded to Iranian missile and drone threats.
The US Treasury added Iran’s Persian Gulf Strait Authority to its Iran-related sanctions list, aiming to prevent Iran from charging tolls on vessels transiting the Strait of Hormuz.
Israel also stepped up attacks on Lebanon and said its ground forces would move further into the country, potentially complicating US-Iran talks on an interim peace deal.
Markets also drew support from a series of Fed-friendly US economic data points released during the session on Thursday.
The April core PCE price index, the Fed’s preferred inflation gauge, rose +3.3% year-over-year, in line with expectations and the largest increase in two and a half years.
US Q1 GDP was revised downward to +1.6% on a quarter-over-quarter annualized basis, missing expectations of no change at +2.0%, while Q1 personal consumption was revised lower to +1.4% from a previously reported +1.6%.
US April capital goods new orders for nondefense items excluding aircraft and parts fell -1.1% month-over-month, versus expectations of a +0.4% increase and the biggest decline in a year.
US weekly initial unemployment claims rose by +5,000 to 215,000, coming in weaker than market expectations of 211,000 and signaling some softening in the labor market.
April new home sales fell -6.2% month-over-month to 622,000, falling short of the consensus expectation of 660,000.
Hawkish remarks from several Federal Reserve officials weighed on both stocks and bonds during the session, offsetting some of the broader market optimism.
Fed Governor Lisa Cook said inflation is headed in the wrong direction and that she would be prepared to raise interest rates if that trend persists.
Minneapolis Fed President Neel Kashkari said US consumer prices are still “much too high” and that bringing down inflation remains his top priority.
St. Louis Fed President Alberto Musalem said inflation is meaningfully above target, that expectations are rising, and that the Fed should respond to higher real rates by hiking policy.
Markets are currently discounting a 0% chance of a -25 basis point FOMC rate cut at the next meeting scheduled for June 16-17.
Chipmakers and AI-infrastructure stocks led the broader market higher, with ARM Holdings Plc (ARM) closing up more than +11% and Advanced Micro Devices (NASDAQ: AMD) and Qualcomm (QCOM) each closing up more than +4%.
Drone-related stocks surged after the Wall Street Journal reported the Trump administration is exploring funding deals with a group of drone companies, with Unusual Machines (UMAC) closing up more than +59% and Red Cat (RCAT) closing up more than +34%.
Snowflake (SNOW) closed up more than +36% after reporting Q1 revenue of $1.39 billion, above the consensus of $1.33 billion, and raising its 2027 product revenue forecast to $5.84 billion from a prior estimate of $5.66 billion.
Dollar Tree (DLTR) closed up more than +17% to lead S&P 500 gainers after reporting Q1 adjusted EPS of $1.74, beating the consensus of $1.55, and raising its 2027 adjusted EPS estimate to a range of $6.70 to $7.10.
Best Buy (BBY) closed up more than +15% after forecasting Q2 comparable sales up +1.00%, stronger than the consensus expectation of down -0.32%.
On the downside, Photronics (PLAB) closed down more than -36% after forecasting Q3 adjusted EPS of 39 cents to 45 cents, well below the consensus of 54 cents.
Tyson Foods (TSN) closed down more than -6% after announcing that CEO King will step down after five years in the role.
With 83% of the 482 S&P 500 companies that have reported Q1 earnings beating estimates, Q1 S&P 500 earnings are projected to climb +12% year-over-year according to Bloomberg Intelligence, though stripping out the technology sector leaves growth at around +3%, the weakest in two years.
