Wall Street Rallies as Oil Retreats and US-Iran Deal Hopes Lift Sentiment

Index Update

US stocks closed sharply higher on Thursday as easing oil prices and hopes of reduced Middle East tensions lifted sentiment. The S&P 500 rose 1.8%, the Nasdaq gained 2.5%, and the Dow jumped 930 points, supported by strong gains in technology and semiconductor stocks ahead of SpaceX’s expected IPO. However, stronger PPI data reinforced expectations of a potential Fed rate hike later this year.

Market Movers

Among the top-performing stocks of the session Galaxy Payroll Group Limited. surged 113.09%, while Propanc Biopharma, Inc. rallied 80.00%. On the losing side, Big Tree Cloud Holdings Limited. fell 46.11%, while Atossa Therapeutics, Inc. declined 41.25%, making them the weakest performers during the trading day.

Commodities Update

Crude oil prices declined sharply on Friday, with WTI falling more than 4% below USD 84 per barrel and Brent dropping over 4% below USD 86.5 per barrel, reaching their lowest levels in several months. The selloff was driven by growing optimism that the US and Iran could soon reach a peace agreement, easing concerns over energy supply disruptions. Reports indicate that a proposed 14-point draft agreement includes lifting oil sanctions on Iran, reopening the Strait of Hormuz within 30 days, releasing frozen Iranian funds, and reducing US military presence in the region, although the deal still awaits Iranian approval. While improving prospects for a resolution have reduced geopolitical risk premiums in oil markets, uncertainty remains due to ongoing tensions in the Strait of Hormuz and continued threats to commercial shipping despite a recent increase in tanker traffic.

Gold and silver remained under pressure on Friday despite optimism over a potential US-Iran peace deal, with gold trading near USD 4,200 per ounce and silver around USD 67 per ounce. Both metals were weighed down by expectations of higher interest rates, as elevated energy-driven inflation strengthened the case for tighter monetary policy. The ECB’s first rate hike since 2023, higher inflation forecasts, and a 6.5% YoY rise in US producer prices further reinforced rate-hike expectations, keeping bullion on track for weekly losses.

Macro Updates

Dollar Stabilizes as Geopolitical Risk Eases

The dollar index edged up to around 99.8 on Friday but remained under pressure after reduced safe-haven demand followed renewed optimism over a potential US-Iran peace deal. Lower oil prices helped ease inflation concerns, although stronger-than-expected US producer inflation and elevated consumer prices kept expectations of a possible Federal Reserve rate hike later this year intact.

Bonds Commentary

The US 10-year Treasury yield hovered around 4.47% on Friday after falling sharply in the previous session, as optimism over a potential US-Iran peace deal pushed oil prices lower and eased inflation concerns. However, stronger-than-expected US producer inflation and earlier signs of rising consumer prices kept expectations of a possible Federal Reserve rate hike intact.

Futures Update

US equity futures rose on Friday as optimism over a potential US-Iran agreement eased energy market concerns and supported risk sentiment. S&P 500, Nasdaq 100 and Dow futures gained over 0.5%, helped by lower oil prices, softer bond yields, strong demand for SpaceX’s IPO, and gains in AI infrastructure and financial stocks.

After an initially directionless session, stocks rallied strongly during Thursday afternoon trading, with the major averages recovering sharply from the previous day's weakness and ending the day with solid gains despite paring some advances into the close. However, the S&P 500's technical picture has deteriorated on the intraday timeframe, with the index falling 1.62% to 7,267 after retreating sharply from its recent high near 7,600. The decline pushed price below both key EMAs on heavy volume of 3.21 billion shares, indicating a more meaningful breakdown rather than a routine pullback. Momentum has weakened significantly, as RSI has dropped from overbought levels above 70 to around 40 while crossing below its signal line, confirming growing bearish pressure. The pace of this RSI deterioration resembles the correction seen in April, increasing the risk of further near-term downside. Immediate support is located in the 7,200–7,265 range; a decisive break below this zone could accelerate selling toward the rising EMA support cluster. Conversely, a recovery back above 7,350 would be the first indication that buyers are regaining control and attempting to re-establish upward momentum.