US stock markets witnessed a significant uptick on Friday, continuing to climb amid easing geopolitical tensions. Following Iran’s announcement that the Strait of Hormuz is open for commercial traffic, the S&P 500 index rose by 1.2%, while the Nasdaq Composite saw a 1.5% increase, and the Dow Jones Industrial Average surged by 1.9%, adding over 900 points to its tally.
The market reacted positively as futures for both Brent and West Texas Intermediate (WTI) crude oil fell by around 11% after Iran’s Foreign Minister declared that the crucial shipping lane would remain accessible to commercial vessels during a temporary ceasefire between Israel and Lebanon. This announcement allowed markets to recover from prior losses due to the recent conflicts involving Iran.
President Donald Trump has voiced optimism regarding ongoing negotiations, indicating that a permanent peace deal with Iran could be forthcoming, further boosting market confidence.
In corporate earnings, Netflix experienced a sharp decline of more than 9% in after-hours trading despite reporting first-quarter results that exceeded expectations. The drop stemmed from a weaker outlook for the second quarter. Conversely, Truist Financial and State Street reported earnings that surpassed market estimates.
International stock markets mirrored the US trends. The iShares MSCI ACWI ex U.S. ETF reached its first record high since February, underscoring that this rally is not isolated to the US as global equities also showed strength. The S&P 500 has risen 12% over the past fortnight, with some international ETFs outpacing it, especially those from South Korea, Taiwan, Greece, Poland, and Turkey.
In the tech sector, the Technology Select Sector SPDR Fund, which focuses on large-cap technology stocks, also reached a record high. The Invesco Small-cap Tech ETF followed a similar trend, achieving five consecutive record highs. Additionally, the Semiconductor ETF has logged eight consecutive record highs, suggesting robust momentum in technology stocks.
This surge comes after a remarkable recovery period for the stock market, driven by a combination of diplomatic optimism, strong earnings from financial institutions, and a cooler-than-expected Producer Price Index, which has contributed to a generally bullish outlook in the markets.
Individual stocks faced mixed signals on Friday. Netflix’s stock fell by 10% in premarket trading due to disappointing future guidance. Alcoa’s shares dropped 1.8% after underwhelming quarterly results, while Affirm’s stock jumped nearly 6%, buoyed by positive analyst recommendations.
Overall, the market’s swift recovery and current record levels demonstrate significant investor optimism amid evolving geopolitical landscapes, with the focus now shifting to the sustainability of this bullish trend in the upcoming trading sessions.
