Wall Street closed higher on Friday, driven by defensive stocks and falling bond yields. Investor sentiment remained upbeat amid signs of progress in the ongoing peace talks with Iran. All three benchmark indexes ended in the green. The markets were closed on Memorial Day Monday.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 0.6%, or 294.04 points, to close at 50,579.7. Twenty components of the 30-stock index ended in positive territory, while 10 ended in negative. This was a record closing high for the benchmark index.
The tech-heavy Nasdaq Composite added 50.87 points, or 0.2%, to close at 26,343.97.
The S&P 500 gained 27.75 points, or 0.4%, to close at 7,473.47. Nine of the 11 broad sectors of the benchmark index closed in the green. The Health Care Select Sector SPDR (XLV), the Utilities Select Sector SPDR (XLU) and the Industrials Select Sector SPDR (XLI) advanced 1.2%, 0.8% and 0.7%, respectively, while the Communication Services Select Sector SPDR (XLC) declined 0.7%.
The fear gauge CBOE Volatility Index (VIX) decreased 1% to 16.59. A total of 17.33 billion shares were traded on Friday, lower than the last 20-session average of 18.54 billion. Advancers outnumbered decliners by a 1.68-to-1 ratio on the NYSE.
Wall Street Edges Higher on Positive Iran Peace Talks
Wall Street edged higher on Friday as investors grew optimistic that the United States and Iran were making progress toward a diplomatic resolution to the Middle East conflict. Markets reacted positively after U.S. Secretary of State Marco Rubio said there were “some good signs” emerging from negotiations, even though he cautioned that reaching a final agreement would remain difficult. Reports also suggested that gaps between the two sides had narrowed, boosting hopes that tensions around the Strait of Hormuz could eventually ease.
The possibility of a peace deal reduced fears of prolonged supply disruptions in global oil markets. The Dow Jones Industrial Average climbed to a record high, while the S&P 500 extended its winning streak to eight consecutive weeks. Technology, industrial and healthcare stocks led gains as investors rotated back into risk assets. However, this optimism was laced with caution because Iranian officials warned that major differences still existed, particularly regarding uranium enrichment and control of the Strait of Hormuz.
Consequently, shares of Merck & Co., Inc. MRK and Vistra Corp. VST added 5.6% and 4.8%, respectively. Both currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Treasury Yields Fall From Recent Highs
Falling treasury yields also boosted investor sentiment on Friday. The benchmark U.S. 10-year Treasury yield fell 2.6 basis points to 4.558%, retreating from recent highs and reducing pressure on equity valuations. Lower long-term borrowing costs supported growth and technology stocks, while optimism surrounding U.S.-Iran peace talks further improved risk appetite. The decline in yields also eased concerns over tighter financial conditions and economic slowdown fears.
This coincided with Kevin Warsh being sworn in as Fed Chair at a crucial time for the U.S. economy, with rising gasoline prices linked to the Iran conflict stoking inflation and hurting consumer sentiment. However, easing long-dated treasury yields helped calm investor concerns over inflation and tighter monetary policy, supporting Wall Street sentiment despite lingering economic uncertainty.
Weekly Roundup
For the week, the Dow Jones Industrial Average gained 2.1%, the S&P 500 advanced 0.9% and the Nasdaq Composite rose 0.5%. The gains marked the S&P 500’s eighth consecutive weekly advance, supported by easing treasury yields, optimism over U.S.-Iran peace talks and strong corporate earnings.
Economic Data
Per the University of Michigan, consumer sentiment in the United States for May was revised down to 44.8 from the previously reported 48.2. The number for April remained unrevised at 49.8.
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