US Markets Rally on AI Earnings Strength Amid Easing Middle East Tensions

index Update

US Equity markets closed sharply higher on Wednesday as optimism surrounding a potential resolution to the Iran conflict improved investor sentiment and strengthened the broader macroeconomic outlook. The S&P 500 and Nasdaq Composite advanced more than 1% to fresh record highs, while the Dow Jones Industrial Average gained nearly 600 points. Market confidence improved after reports indicated that the US and Iran were moving closer to a memorandum that could restore trade flows through the Strait of Hormuz, resulting in a notable decline in energy prices. Technology and AI-related stocks led the gains, with AMD surging 20% after reporting stronger-than-expected Earnings and raising its outlook on robust Data Center Demand. Super Micro Computer climbed 15% following upbeat quarterly results, while Nvidia, Micron, Intel, and Sandisk also posted solid gains. In addition, Disney advanced 5% after strong Revenue growth, and Uber rose 7% on optimistic bookings guidance.

Market Movers

Among the strongest performers, Star Fashion Culture Holdings Limited surged 96.53%, while Powell Max Limited gained 95.28% during the Trading session. On the downside, Primoris Services Corporation declined 50.11%, and OneConstruction Group Limited fell 40.15%, making them the weakest-performing stocks of the session.

Commodities Update

WTI crude futures declined toward USD 91.5 per barrel, while Brent Crude slipped near USD 97.5 per barrel on Thursday, extending losses from the previous session as investors evaluated the possibility of a Middle East peace agreement that could support the gradual reopening of the Strait of Hormuz and ease Supply concerns. Sentiment weakened after reports suggested that the US had sent a memorandum of understanding to Iran through Pakistani intermediaries aimed at formally ending the conflict, with Tehran expected to respond in the coming days. However, uncertainty remained after President Trump stated that no agreement had yet been finalized and warned of renewed military strikes if Iran failed to comply. Meanwhile, US crude exports climbed to record levels as global buyers increasingly relied on American oil supplies amid disruptions caused by the conflict.

Gold climbed above USD 4,700 per ounce, while silver approached USD 79 per ounce, extending gains from the previous session as easing geopolitical tensions and falling oil prices reduced Inflation concerns and supported expectations of less restrictive Monetary Policy. Investor sentiment improved following reports that the US had proposed a peace framework to Iran aimed at ending the conflict and supporting the reopening of the Strait of Hormuz. However, Chicago Federal Reserve President Austan Goolsbee cautioned that inflation had accelerated since the conflict began and remained above the Federal Reserve’s 2% target.

Macro Updates

US Job Cuts Rise as AI-Led Restructuring Accelerates

US-based employers announced 83,387 job cuts in April 2026, marking the highest monthly level in three months and the third-highest April total since 2009, although layoffs remained 21% lower compared with the same month last year. The technology sector led announced reductions with 33,361 job cuts, followed by Warehousing and services. Artificial intelligence remained the primary driver behind layoffs for the second consecutive month, accounting for 26% of total announced cuts. So far in 2026, employers have announced 300,749 layoffs, down 50% from the prior-year period, with the technology sector contributing the largest share. AI-related restructuring has been linked to 49,135 layoffs this year as companies continue redirecting spending toward AI investments and innovation initiatives.

US Dollar Weakens on Lower Inflation Expectations

The US Dollar Index slipped below 98 on Thursday, extending declines from the previous session as investors increased expectations of a potential US-Iran agreement that could formally end the conflict and support the reopening of the Strait of Hormuz. Reports indicated that both countries were nearing a preliminary agreement that could lay the groundwork for broader nuclear negotiations, although President Trump warned that no final deal had been reached and threatened renewed military action if Iran failed to comply. The sharp decline in oil prices eased inflation concerns and reduced expectations that central banks would need to maintain restrictive monetary policy for an extended period. However, Federal Reserve official Austan Goolsbee noted that inflation had recently accelerated and remained above the Central Bank’s long-term target.

US Crude and Fuel Inventories Continue to Decline

US Crude Oil inventories declined by 2.314 million barrels to 457.2 million barrels in the week ended May 1, slightly below market expectations for a larger drawdown. Inventories at the Cushing, Oklahoma delivery hub also moved lower during the week. Refinery activity weakened modestly, with both crude processing rates and utilisation levels declining. Fuel inventories tightened further, as gasoline stocks dropped by 2.504 million barrels, exceeding market expectations, while distillate inventories, including diesel and heating oil, fell by 1.294 million barrels. Meanwhile, net US crude imports increased sharply by 1.415 million barrels per day, reflecting stronger inbound supply flows.

Bonds Commentary

The Yield on the 10-year US Treasury note remained near 4.35% on Thursday after falling sharply in the previous session, as easing geopolitical tensions between the US and Iran triggered a decline in oil prices and reduced inflation concerns. Investor sentiment improved after reports suggested both nations were nearing a preliminary agreement aimed at ending the conflict, reopening the Strait of Hormuz, and establishing a framework for broader nuclear negotiations. However, President Trump warned that no final agreement had yet been reached and threatened renewed military action if Iran failed to comply. Lower oil prices reduced expectations of prolonged restrictive Federal Reserve policy, while the US Treasury indicated that it would continue prioritizing shorter-term Debt issuance over the coming quarters without making major adjustments to its borrowing strategy.

Futures Update

US equity futures traded mostly flat on Thursday following strong gains in the previous two sessions, as investors balanced robust corporate earnings against continued uncertainty surrounding Middle East energy supply developments. Futures linked to the S&P 500 and Nasdaq 100 hovered near record highs, while the Dow remained close to its February peak. Sentiment remained supported by easing energy prices amid expectations that a potential US-Iran agreement could restore tanker flows through the Strait of Hormuz, thereby reducing inflation concerns and easing pressure on the Federal Reserve to maintain aggressive Interest Rate policies. In premarket trading, McDonald’s gained 3% following strong earnings results, while Fortinet surged 15% after reporting upbeat quarterly numbers. Meanwhile, semiconductor stocks traded mostly stable after the previous session’s rally, with AMD remaining flat following its sharp 19% advance.

Stocks moved sharply higher on Wednesday, extending Tuesday’s gains and pushing both the Nasdaq and the SPX to fresh record closing highs. The S&P 500 climbed 105.90 points, or 1.46%, to close at 7,365.11. Technically, SPX remains firmly bullish after breaking above both the 21-period and 50-period EMAs, with price holding near session highs. The rising EMA structure signals strong buying momentum, while RSI near 79 reflects robust strength despite overbought conditions that could trigger brief consolidation. Volume expansion during the breakout supports continued upside momentum. Immediate resistance is seen near 7,380–7,400, while support is positioned around 7,320 and the 21 EMA near 7,280. As long as price stays above the short-term EMA zone, the intraday trend is likely to remain buy-on-dips bullish.