U.S. equity markets closed higher on Friday, with the S&P 500 and Nasdaq 100 reaching one-week peaks while the Dow Jones Industrial Average notched a fresh record high. The benchmark S&P 500 Index ($SPX) advanced 0.37%, the Dow Jones Industrial Average ($DOWI) gained 0.58%, and the Nasdaq 100 Index ($IUXX) rose 0.42%. June E-mini S&P 500 futures (ESM26) added 0.35%, while June E-mini Nasdaq futures (NQM26) climbed 0.42%.
Gains were fueled by optimism surrounding potential diplomatic progress between the United States and Iran, alongside robust performance in semiconductor and artificial intelligence infrastructure equities. Software shares also rallied, with Workday jumping more than 5% after delivering first-quarter results that exceeded analyst estimates and providing an upbeat forward-looking statement.
Despite the advance, equities retreated from session highs after the University of Michigan revised its May consumer sentiment index lower to a historic low of 44.8. Simultaneously, near-term inflation expectations were adjusted upward, reaching a nine-month high of 4.8%.
Energy markets remained volatile amid ongoing geopolitical tensions. West Texas Intermediate crude futures (CLM26) experienced significant price swings before closing modestly higher. Recent developments include reports of Qatari diplomatic initiatives supporting negotiations, with Iran acknowledging that recent U.S. proposals have narrowed differences between the parties. The proposed framework suggests a short-term agreement to reopen the Strait of Hormuz in exchange for lifted sanctions, followed by comprehensive nuclear program negotiations.
The International Energy Agency reported in its monthly assessment that global oil inventories declined by approximately 4 million barrels per day during March and April, with market undersupply conditions expected to persist through October. Goldman Sachs estimates current supply disruptions have removed nearly 500 million barrels from global stockpiles, potentially reaching 1 billion barrels by June.
Federal Reserve futures markets assign zero probability to a 25-basis-point rate cut at the June 16-17 policy meeting. First-quarter earnings season trends remain positive, with 83% of the 475 S&P 500 companies reporting results topping consensus forecasts. Overall S&P 500 earnings are tracking a 12% year-over-year increase, though excluding technology, projected growth moderates to approximately 3%.
International equity markets posted broad gains, with the Euro Stoxx 50 climbing 0.99% to a two-week peak, China’s Shanghai Composite advancing 0.87% from three-week lows, and Japan’s Nikkei rising sharply 2.68% to a one-week high.
Interest Rates
June 10-year Treasury notes (ZNM6) edged higher on Friday, with yields slipping to 4.558%. The move followed declining inflation expectations, as measured by the 10-year breakeven inflation rate falling to 2.401%, a one-month low. However, gains evaporated after Federal Reserve Governor Christopher Waller signaled support for potential rate increases if inflation fails to moderate, while revised consumer sentiment data added downward pressure.
European sovereign yields retreated, with Germany’s 10-year Bund yield declining to 3.022% and the United Kingdom’s gilt yield falling to 4.887%. Germany’s May IFO business climate index rose unexpectedly to 84.9, while the June GfK consumer confidence figure improved to -29.8. European Central Bank officials continue to signal potential rate hikes, with swaps markets pricing in an 88% probability of a 25-basis-point increase at the June 11 policy meeting.
U.S. Stock Movers
Semiconductor equities led the market higher, with Qualcomm surging more than 11%, NXP Semiconductors rising over 5%, and Advanced Micro Devices, Analog Devices, and Texas Instruments each gaining more than 3%. ARM Holdings, Marvell Technology, ASML Holding, KLA Corporation, and Microchip Technology posted gains exceeding 2%, while Lam Research and Applied Materials advanced over 1%.
Workday led software names with a gain exceeding 5%, followed by Atlassian and Intuit each up more than 4%, and Salesforce and ServiceNow rising over 2%. Datadog and Oracle also finished higher by more than 1%.
Dell Technologies soared more than 16% after Wells Fargo raised its price target to $270 from $180. IMAX jumped over 15% following reports of potential sale discussions, while Estee Lauder rose 11% after abandoning its merger with Puig Brands. Zoom Communications added 9% after reporting first-quarter results above estimates and raising its 2027 revenue outlook.