Wall Street extended its rally on Friday as investors grew increasingly optimistic that the United States and Iran could sign an interim peace agreement within days.
The S&P 500 Index ($SPX) (SPY) rose +0.50%, the Dow Jones Industrial Average ($DOWI) (DIA) gained +0.70%, and the Nasdaq 100 Index ($IUXX) (QQQ) climbed +0.64% on the session.
June E-mini S&P futures (ESM26) rose +0.65%, and June E-mini Nasdaq futures (NQM26) advanced +0.87%, reflecting broad bullish momentum heading into the weekend.
A potential interim deal would end military hostilities, reopen the Strait of Hormuz, and lift the US blockade on Iran and its oil exports, with longer-term negotiations to follow on sanctions and frozen assets.
Talks would subsequently address more complex matters, including the release of $24 billion in frozen Iranian assets and the resolution of Iran’s nuclear program, though Iran said its leaders still need to make a final decision.
The rally built on momentum from Thursday, when President Trump canceled planned military strikes against Iran after citing “discussions” with Iranian leadership and stating that the “time and place of the signing” would “be announced shortly.”
WTI crude oil prices (CLN26) fell -3.23% on Friday, reflecting market confidence that a deal could restore supply flows through the strategically critical Strait of Hormuz in the near term.
Consumer sentiment data added further fuel to the advance, with the University of Michigan’s June US Consumer Sentiment Index rising +4.1 to 48.9, beating expectations for a reading of 46.0.
Inflation expectations also eased, with the June 1-year rate falling to +4.6% from +4.8% in May, and the 5-10 year rate dropping to +3.4% from +3.9%, both below analyst forecasts.
Overseas markets also closed sharply higher, with the Euro Stoxx 50 up +2.16%, Japan’s Nikkei-225 gaining +2.81%, and China’s Shanghai Composite closing up +1.12%.
Space Exploration Technologies Corp (NASDAQ: SPCX), doing business as SpaceX, made its market debut on Friday, closing at $161 per share, up +19% from its IPO price of $135, with the offering more than four times oversubscribed.
SpaceX’s strong debut was seen as a positive signal for investor sentiment broadly, with analysts suggesting it could support the upcoming IPOs of AI companies Anthropic and OpenAI.
Chip stocks recovered from early session weakness to close mostly higher, with the iShares Semiconductor ETF (SOXX) rising +1.59%, adding to Thursday’s sharp rally of +8.39%.
Intel (INTC) surged +6.51% and KLA-Tencor Corp (KLAC) rose +5.55%, while both AMD (AMD) and Qualcomm (QCOM) closed up more than +4% as AI-driven data center demand continued to underpin the sector.
Adobe (ADBE) fell more than -6% after CFO Dan Durn announced he would leave the company on June 15, compounding investor concern following earlier news that Adobe’s CEO would also resign.
The Adobe selloff dragged on software peers, with Autodesk (ADSK) falling more than -3% and Palantir Technologies (PLTR) declining more than -2%, adding to pressure already felt from Oracle’s disappointing earnings.
Airline stocks gained on the back of falling oil prices, with Southwest Airlines (LUV), United Airlines (UAL), and American Airlines (AAL) all rallying by more than +2% on the session.
Astera Labs (ALAB), CoreWeave (CRWV), Nebius Group (NBIS), Rocket Lab (RKLB), and Teradyne (TER) received a boost after Nasdaq announced those stocks will join the Nasdaq 100 Index, effective at the market open on June 22.
Stocks set to exit the Nasdaq 100 include Charter Communications (CHTR), Cognizant Technology Solutions (CTSH), Insmed (INSM), Verisk Analytics (VRSK), and Zscaler (ZS), effective on the same date.
In the bond market, the 10-year T-note yield rose +2.2 basis points to 4.483%, as the T-note market remained concerned about sticky inflation pressures even in a scenario where the Strait of Hormuz reopens.
Markets are currently pricing in only a 4% chance of a +25 basis point rate hike at the upcoming FOMC meeting on June 16-17, suggesting traders expect policymakers to hold steady despite lingering inflation concerns.
