US Markets Extend Rally as Middle East Tensions Drive Oil Prices Higher

index Update

US Equity markets ended Friday on a positive note, with the S&P 500 advancing 0.8% to close at 7,399 and the Nasdaq Composite climbing 1.7% to 26,247, both reaching new record highs. The Dow Jones Industrial Average also posted modest gains, rising 12 points to 49,609. Investor confidence was supported by stronger-than-expected US labor market data, as April nonfarm payrolls increased by 115,000 while the Unemployment rate remained unchanged at 4.3%, highlighting continued economic resilience. Markets also tracked renewed geopolitical tensions involving the US and Iran in the Strait of Hormuz, although President Donald Trump indicated that the ceasefire remained in place as investors awaited Iran’s response to a US-backed peace proposal. Technology stocks continued to outperform amid optimism surrounding AI-related spending trends, with Micron Technology and Sandisk recording strong gains. For the week, the Nasdaq surged 4.5% while the S&P 500 gained 2.3%, marking a sixth consecutive week of advances and the longest winning streak since 2024.

Market Movers

Among the strongest-performing stocks of the session, Innodata Inc rallied 86.00%, while Westrock Coffee Company advanced 39.83%. On the downside, Forward Air Corporation declined 43.05%, while Artivion, Inc. dropped 28.26%, making them the weakest-performing stocks during the Trading session.

Commodities Update

Crude Oil prices moved sharply higher on Monday, with WTI crude rising above USD 98 per barrel and Brent Crude climbing past USD 103 per barrel, as escalating tensions in the Middle East heightened concerns over global energy Supply disruptions. Oil markets reacted after President Donald Trump rejected Iran’s latest response regarding efforts to end the ongoing 10-week conflict, describing Tehran’s proposal as “totally unacceptable.” Reports suggested Iran refused to dismantle its nuclear infrastructure despite offering to transfer part of its enriched uranium stockpile to another country. Additional geopolitical risks emerged following drone attacks near Qatar and hostile drone interceptions by the UAE and Kuwait, raising concerns that the fragile ceasefire could weaken further. The continued closure of the Strait of Hormuz has disrupted global shipments of crude oil, Natural Gas, and refined products, with the IEA characterizing the situation as one of the largest energy supply shocks on record.

Gold and silver prices declined on Monday as rising energy prices and geopolitical tensions strengthened concerns about Inflation and the possibility of further Interest Rate increases by central banks. Gold slipped below USD 4,700 per ounce, while silver traded near USD 80 per ounce after President Donald Trump dismissed Iran’s latest peace proposal response, signaling continued diplomatic uncertainty. Ongoing tensions in the Middle East and the closure of the Strait of Hormuz have kept oil prices elevated, reinforcing inflationary pressures and increasing expectations that central banks could maintain tighter monetary policies for longer, a scenario that typically pressures precious metals.

Macro Updates

US Dollar Strengthens on Safe-Haven Demand

The US Dollar Index rose to around 98 on Monday, recovering part of last week’s decline as investors moved toward safe-haven Assets amid escalating geopolitical tensions between the US and Iran. Market sentiment remained cautious after President Donald Trump rejected Iran’s latest response to his peace proposal, while negotiations to resolve the ongoing conflict showed limited progress. At the same time, stronger-than-expected US employment data, with April nonfarm payrolls rising by 115,000 compared with expectations of 62,000, reinforced expectations that the Federal Reserve may maintain higher interest rates for an extended period. Investors are now focused on upcoming US inflation data to assess the broader impact of rising energy prices on inflation trends.

Bonds Commentary

The Yield on the US 10-year Treasury note increased to around 4.39% on Monday as persistent geopolitical tensions and resilient economic data supported expectations of a prolonged higher interest rate environment. Investor attention remained centered on stalled negotiations between the US and Iran, with elevated oil prices continuing to fuel inflation concerns. Additionally, stronger-than-expected US labor market data reinforced the view that the Federal Reserve could keep interest rates unchanged for longer. Market Participants are now awaiting fresh US inflation figures for further indications of how higher energy costs are affecting overall price pressures in the economy.

Futures Update

US stock futures traded modestly lower on Monday as rising uncertainty surrounding the Middle East conflict weighed on investor sentiment after President Donald Trump rejected Iran’s latest peace proposal response. The continued disruption in the Strait of Hormuz has kept oil prices elevated, intensifying concerns about inflation and broader economic risks. Investors are also closely monitoring upcoming US inflation data for additional insight into the extent to which higher energy prices are influencing broader inflationary conditions.

Following the pullback seen over the course of the previous session, stocks showed a strong move back to the upside during trading on Friday. The tech-heavy Nasdaq led the way higher and reached a new record closing high along with the S&P 500. The S&P 500 continued its upward momentum but showed signs of intraday hesitation near recent highs, with price action pushing toward the 7,400 area before mildly consolidating. The index remains firmly above its short-term moving averages, with the 21-day EMA trending above the 50-day EMA, reinforcing the ongoing bullish structure. However, momentum appears stretched, as the RSI is holding in overbought territory near the mid-to-high 70s, suggesting limited immediate upside without a pause. From a technical standpoint, the rally looks extended in the near term, increasing the likelihood of a brief pullback or sideways consolidation, with initial support seen around 7,250–7,280, followed by stronger support near the 7,100 zone. On the upside, a sustained move above 7,400 could trigger further momentum-driven gains, but failure to hold above 7,350 may invite short-term profit booking and a Retracement toward lower support levels.