US Stocks Rally Ahead of Potential Trump Intervention in Iran Conflict

Market Momentum Continues as Ceasefire Deal Hopes Boost Stocks

The stock market continued its historic streak of weekly gains, driven by hopes of a ceasefire deal in the Iran conflict and the artificial-intelligence trade. The S&P 500 index surged nearly 20% from war-driven lows, putting it on track for its ninth straight weekly advance, the longest stretch since 2023. This occurrence has only been matched a few times since 1985.

The market's momentum was also fueled by Dell Technologies Inc., which surged 28% on a solid outlook driven by demand for AI servers. In contrast, Brent oil fell to $92, poised for its worst month since 2020.

The potential ceasefire deal has been a major catalyst for equity gains, with President Donald Trump announcing that he's making a "final determination" on a preliminary deal to extend a ceasefire. In a social-media post, he reiterated that Iran "will never have a Nuclear Weapon or Bomb" and the Strait of Hormuz must be open and any mines destroyed or removed.

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The text of a possible memorandum of understanding hasn't been finalized, according to Tasnim. Mohammad Bagher Ghalibaf, the speaker of Iran's parliament, said earlier that "we have no trust in guarantees or words, the only criterion is action; no action will be taken before the other side acts."

Analysts believe that the market has already priced in the deal, and confirmation won't cause a big rally. However, if the deal is rejected, it will have a modest negative impact. Strong corporate earnings have also played a critical role in sustaining momentum, according to Adam Turnquist at LPL Financial.

The enthusiasm for stocks is warranted, according to Emily Bowersock Hill at Bowersock Capital Partners. Investors expect the AI infrastructure boom to continue to mask the negative impact of geopolitical disruption. Stock markets care about company profits, as long as earnings grow, stock prices can continue to rise. Action in the bond market was fairly muted on Friday, but Treasuries headed toward their best week since the start of the war.

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