US stocks edged higher on Friday, with the S&P 500, the Dow and the Nasdaq 100 all rising as investors weighed improved prospects for de-escalation in the Middle East and a stronger consumer outlook. The rally was also supported by a pullback in oil prices, after reports that an interim US-Iran peace agreement could be signed as early as this weekend.
In rates, Treasury markets were mixed to lower, with investors continuing to focus on sticky inflation expectations even as crude fell. Overseas markets also posted gains, helping maintain broad risk-on tone ahead of key policy and macro catalysts later this month.
Key takeaways
- Stocks rose: The S&P 500 was up 0.58%, the Dow gained 0.91%, and the Nasdaq 100 climbed 0.64%.
- Oil moved: WTI crude fell by more than 3% on hopes for a near-term US-Iran agreement and the reopening of the Strait of Hormuz.
- Consumer data helped: The University of Michigan’s June consumer sentiment index rose by 4.1 to 48.9, while inflation expectations eased versus May.
- Rates stayed cautious: Ten-year Treasury yields were up 1.6 basis points to 4.477%, reflecting higher inflation expectations despite the oil decline.
- Implication: Market pricing still reflects uncertainty around the inflation path and the Federal Reserve timeline, even with improving near-term geopolitical risk.
What drove the move
Shares found support as news circulated that an interim US-Iran peace agreement could be signed as early as this weekend, potentially ending military hostilities, reopening the Strait of Hormuz, and ending the US blockade on Iran and its oil exports. According to the report, negotiations would then shift to longer-term issues including sanctions, the release of $24 billion in frozen Iranian assets, and resolution of nuclear concerns, while Iran indicated it still needs final approval from its leaders.
The geopolitical optimism followed Thursday’s comments from President Trump, who said he canceled planned military strikes against Iran and referenced “discussions” with Iranian leadership. He added that the timing for any negotiated end to the conflict would be announced and that the naval blockade would remain in effect until a final transaction is completed.
That backdrop helped pressure energy prices. WTI crude oil was down by more than 3% as investors positioned for improved near-term supply dynamics tied to the Strait of Hormuz reopening.
Market reaction: consumer sentiment and rate expectations
Alongside oil’s decline, US consumer sentiment data added support to equities. According to the University of Michigan survey results cited in the report, the June US Consumer Sentiment Index rose 4.1 to 48.9, beating expectations for a rise to 46.0. The same report said the one-year inflation expectations rate eased to 4.6% from 4.8% in May, while five-to-ten-year inflation expectations fell to 3.4% from 3.9%, both versus expectations noted in the article.
Investors also continued to adjust expectations for the Federal Reserve. The report said markets are discounting a zero percent chance of a 25-basis-point rate hike at the next FOMC meeting scheduled for June 16–17.
Despite the softer inflation expectations in the consumer survey, bond trading reflected ongoing concerns about inflation persistence. The report said September 10-year Treasury notes were down slightly, while the 10-year yield was up 1.6 basis points at 4.477%. It also cited an increase in the 10-year inflation expectations measure alongside the crude pullback, suggesting investors were not willing to fully relax inflation risk.
Rates and global policy signals
European bond markets were lower in yield terms, according to the article. The report said the 10-year German bund yield fell by 3.3 basis points to 2.999%, while the 10-year UK gilt yield declined by 6.6 basis points to 4.839%.
For the euro area, the report referenced the European Central Bank’s decision on Thursday to raise the deposit facility rate by 25 basis points to 2.25%. The ECB statement cited by the report pointed to an uncertain outlook, with upside risks for inflation and downside risks for growth. The article said swaps were pricing a 37% chance of another 25-basis-point hike at the ECB’s next meeting on July 23.
Equities in focus: IPO debut, semiconductors, and corporate moves
In single-stock action, Space Exploration Technologies Corp (SpaceX), trading under the ticker used for its equity listing, started trading near $160 per share after beginning trading following its IPO at $135. The report said the IPO was more than four times oversubscribed. While the broader “space” complex saw mixed performance, the initial strength in the listing supported the sentiment backdrop for investor demand in adjacent high-growth themes.
Semiconductor-related names also helped underpin the technology complex. The report said the iShares Semiconductor ETF was up 2.25%, extending Thursday’s sharp rally of 8.39%. It attributed Thursday’s move to signs that AI spending is continuing after Oracle reported quarterly capital expenditures higher than expected, driven by increased data center spending. On Friday, leaders highlighted in the report included Arm Holdings, Qualcomm, AMD and Intel.
Corporate news weighed on parts of software. Adobe shares fell by more than 7% after the report said CFO Dan Durn will leave on June 15, following earlier disclosure that Adobe’s CEO would resign. The article also cited continued pressure on software stocks after negative earnings news from Oracle on Thursday. Autodesk and Intuit were also lower in the report.
In addition, airline stocks were supported as oil prices slid, with United Airlines, American Airlines and Southwest Airlines all up more than 3% in the report. Energy and refiners were mixed in the opposite direction, with Occidental Petroleum, Valero and Marathon Petroleum all up more than 2%.
Separately, the report said several names are set to join the Nasdaq 100 effective at the market open on June 22, including Astera Labs, CoreWeave, Nebius Group and Rocket Lab. It also listed companies leaving the index, such as Charter Communications, Cognizant Technology Solutions, Insmed, Verisk Analytics and Zscaler.
Barclays’ rating change on Travelers, cutting the stock to underweight from equal-weight due to a downbeat outlook for property and casualty profits, was cited as weighing on the shares.
Bigger picture and what to watch next
Risk assets are getting support from improving geopolitical headlines and softer energy prices, while the inflation narrative remains the key swing factor for rates. Next, investors will look for continued confirmation around US-Iran negotiations and for guidance on how markets should interpret the recent easing in consumer inflation expectations. With the FOMC meeting scheduled for June 16–17 and the ECB’s next policy decision on July 23, bond and equity pricing are likely to remain sensitive to any shift in inflation momentum and central-bank communication.
