US stocks rose on Friday, extending a recent rally, as investors welcomed fresh signs of de-escalation in the Middle East conflict and improving prospects for a ceasefire.
The Dow Jones Industrial Average climbed 686 points, or 1.4%, while the S&P 500 advanced 0.77% and the Nasdaq 100 gained 0.73%.
Ceasefire hopes lift sentiment
Investor sentiment improved after developments suggested the seven-week-long conflict in the Middle East could be nearing an end.
US President Donald Trump said Washington could soon secure a peace agreement to end the war with Iran and confirmed that Israel and Lebanon had agreed to a 10-day ceasefire, which took effect Thursday evening.
Iran also signaled cooperation, with Foreign Minister Seyed Abbas Araghchi stating in a post on X: “In line with the ceasefire in Lebanon, the passage for all commercial vessels through Strait of Hormuz is declared completely open for the remaining period of ceasefire, on the coordinated route as already announced by Ports and Maritime Organisation of the Islamic Rep. of Iran.”
The Strait of Hormuz is a critical artery for global oil shipments, and its reopening helped ease concerns about supply disruptions and inflationary pressures tied to energy prices.
Trump, speaking at an event in Las Vegas, said the Iran war “should be ending pretty soon” and described the conflict as “going along swimmingly.” Earlier in the week, he had said the situation was “very close to over” and that Tehran wants to “make a deal very badly.”
The prospect of de-escalation encouraged investors to rotate back into risk assets, including technology and software stocks that had been under pressure during the conflict.
Rally extends as indexes near records
The renewed optimism has pushed US equities to record levels in recent sessions.
The S&P 500 and Nasdaq Composite both notched record closes on Thursday, and a further gain on Friday would mark the Nasdaq’s longest winning streak since 1992 at 13 consecutive sessions.
All three major indexes are also on track for their third straight week of gains. For the week so far, the Dow has risen 1.4%, while the S&P 500 and Nasdaq have climbed 3.3% and 5.2%, respectively.
Earnings, Fed commentary in focus
With no major economic data scheduled for release on Friday, investor attention is shifting toward corporate earnings and central bank commentary. Recent earnings reports have pointed to a resilient US consumer, supporting the broader market.
Among notable movers, Netflix fell 11.5% after forecasting current-quarter earnings below expectations and announcing that co-founder and longtime chairman Reed Hastings would step down. Alcoa dropped 10.17% after reporting weaker-than-expected quarterly results, citing elevated costs and soft demand, while Fifth Third Bancorp edged up 2.2% after posting its earnings.
Federal Reserve officials, including San Francisco Fed President Mary Daly, Richmond Fed President Tom Barkin, and Governor Christopher Waller, are scheduled to speak later in the day. However, recent commentary from policymakers has had limited influence on market expectations.
Markets are currently pricing in the Federal Reserve to hold interest rates throughout 2026, according to LSEG-compiled data, marking a sharp shift from earlier expectations for rate cuts before the onset of the conflict.
Even as optimism builds, investors remain wary that any breakdown in ceasefire talks between US and Iranian officials over the weekend could quickly reignite volatility in global markets.
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