Wall Street Markets Close Higher Amid Waning Tensions, Crude Oil Prices Ease on Reports of US-Iran Truce Extension

U.S. Stocks Reach New Heights as Iran Crisis Eases

U.S. stocks surged on Thursday, with the S&P 500 and Nasdaq posting their third consecutive record closing highs. In contrast, European shares pared their losses following reports that the United States and Iran have agreed to extend a ceasefire and launch negotiations.

The United States and Iran have reportedly reached a memorandum of understanding that extends the truce for an additional 60 days to facilitate negotiations. However, the agreement still requires approval from U.S. President Donald Trump. This development comes after Iran targeted a U.S. air base in Kuwait and the United States struck what it described as an Iranian drone complex near the Strait of Hormuz.

The S&P 500 rose 43.42 points, or 0.58%, to 7,563.78, while the Nasdaq Composite rose 242.74 points, or 0.91%, to 26,917.47. The Dow Jones Industrial Average rose 25.49 points, or 0.05%, to 50,669.77.

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Despite the positive market sentiment, a raft of economic data showed first-quarter U.S. GDP grew at a more sluggish pace than originally reported. The saving rate sank to its lowest level since June 2022, inflation continued to heat up, and new orders for core-capital goods unexpectedly dropped.

The U.S. Federal Reserve, now under the chairmanship of Kevin Warsh, faces a dilemma regarding monetary policy due to the combination of weak GDP and rising price growth. "We have a stagflation problem, and that's a big problem for the Fed," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York. "We have growth that's not that strong and rising inflation, and that suggests that a Fed interest rate hike is getting closer to reality as opposed to a rate cut."

European shares dropped as U.S.-Iran developments kept risk appetite low, but pared steeper losses. MSCI's gauge of stocks across the globe rose 2.87 points, or 0.26%, to 1,125.15. The pan-European STOXX 600 index fell 0.49%, while Europe's broad FTSEurofirst 300 index fell 12.10 points, or 0.48%.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

Emerging market stocks fell 11.31 points, or 0.65%, to 1,727.82. Oil prices were split, with U.S. WTI edging higher, while Brent dipped due to its vulnerability to Strait of Hormuz traffic disruptions.

U.S. crude rose 0.25% to settle at $88.90 per barrel, while Brent settled at $93.71 per barrel, down 0.62% on the day. U.S. Treasury yields turned lower following the weaker-than-expected U.S. economic data and news of the potential interim deal in the Iran war.

The yield on benchmark U.S. 10-year notes fell 2.8 basis points to 4.453%, from 4.481% late on Wednesday. The 30-year bond yield fell 2.9 basis points to 4.9817% from 5.011% late on Wednesday.

The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, fell 0.8 basis points to 4.025%, from 4.033% late on Wednesday. The dollar edged lower in the wake of the largely disappointing economic data and the developments relating to the Iran war.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.27% to 99.02, with the euro up 0.19% at $1.1646. Against the Japanese yen, the dollar weakened 0.18% to 159.23.

In cryptocurrencies, bitcoin fell 2.47% to $73,306.56. Ethereum declined 2.35% to $2,011.65. Gold prices reversed earlier losses, with spot gold rising 0.9% to $4,497.35 an ounce. U.S. gold futures rose 1.04% to $4,494.60 an ounce.