Wall Street extends record gains on hopes for Middle East peace, while Dell shares surge

Wall Street’s major indexes continued to hit fresh record highs on Friday, putting them on track for both weekly and monthly gains, as technology stocks advanced and investor optimism increased following reports that the United States and Iran had reached an agreement to extend the ceasefire.

The technology sector jumped 2.2%, supported by strong gains in semiconductor stocks.

Dell shares surged 34.7% after the company raised its annual revenue and profit forecasts on Thursday. Shares of Hewlett Packard Enterprise climbed 13.6%, while Super Micro Computer gained 17%.

Sources told Reuters that Washington and Tehran had agreed to extend the ceasefire and lift restrictions on navigation through the Strait of Hormuz, although US President Donald Trump has not yet given final approval.

All three major indexes reached new record highs during trading, driven by renewed enthusiasm for artificial intelligence and strong earnings growth, despite lingering concerns about the impact of the Iranian conflict on inflation and the global economy.

Bob Savage, Head of Macro Market Strategy at BNY, said:

“Markets are ending May with a clear risk-on tone, driven by enthusiasm around artificial intelligence, lower oil prices, and growing expectations that US-Iran tensions will remain under control under a ceasefire extension framework.”

Nine of the eleven major sectors within the S&P 500 declined. The communication services sector fell 1.2%, led by a 1.5% decline in Alphabet shares.

Meanwhile, the Philadelphia Semiconductor Index rose 1.7%, bringing its gains for the current quarter to more than 70%.

The software services index also advanced about 4%, erasing all of its losses since the end of January, when concerns over artificial intelligence-related disruptions weighed on the sector.

The S&P 500 is heading toward its ninth consecutive weekly gain, the longest winning streak since December 2023. The Dow Jones and Nasdaq are also expected to finish the week higher, with all three major indexes on track for a second consecutive month of gains.

As of 10:05 a.m. New York time, the Dow Jones Industrial Average had risen 151.04 points, or 0.30%, to 50,820.01. The S&P 500 gained 31.69 points, or 0.41%, to 7,594.98, while the Nasdaq Composite advanced 156.47 points, or 0.58%, to 27,073.94.

US economic data released on Thursday showed inflation recorded its fastest annual increase in three years during April, while first-quarter GDP growth was revised down to an annualized rate of 1.6%.

Savage added:

“At the same time, central banks remain focused on inflation risks. Officials at both the European Central Bank and the Federal Reserve have warned that supply shocks and rising inflation expectations could keep the possibility of further rate hikes on the table as growth indicators improve.”

Jeffrey Schmid, President of the Federal Reserve Bank of Kansas City, warned that the energy price shock may not be temporary, while Michelle Bowman, Vice Chair for Supervision at the Federal Reserve, said persistently elevated inflation could require tighter monetary policy.

Money markets currently expect the Federal Reserve to keep interest rates unchanged through the end of the year, with limited expectations for a 25-basis-point rate hike in December.

In other stock movements, Gap shares fell 17.7% after the apparel retailer lowered its annual sales forecast, while American Eagle Outfitters dropped 14.9% after maintaining its comparable annual sales outlook.

On the other hand, Okta shares jumped 21% after the digital identity company reported quarterly revenue that exceeded expectations.

Declining stocks outnumbered advancing issues by a ratio of 1.05-to-1 on the New York Stock Exchange and 1.03-to-1 on the Nasdaq.

The S&P 500 recorded around 20 new 52-week highs against six new lows, while the Nasdaq posted 76 new highs and 24 new lows.