S&P 500 and Nasdaq near record highs as oil declines and markets find relief

The S&P 500 and Nasdaq remained close to new record highs on Thursday, supported by the continued decline in oil prices amid hopes for an agreement between the United States and Iran that could restore crude flows through the Strait of Hormuz to normal levels.

Officials and sources said that the United States and Iran are nearing a limited and temporary agreement to stop the war, with growing optimism that this could pave the way for reopening the narrow waterway, which is considered a vital artery for global energy and trade.

Tehran is expected to respond to the peace proposals soon.

Global stocks recorded new record highs, while oil prices fell by about 4%, moving further away from the $100 per barrel level.

Robert Pavlik, senior portfolio manager at Dakota Wealth, said:

“I would be surprised if this conflict continues for a long time. And if it does continue, it will be because the Iranians want to prolong it. I think Trump wants to end this matter.”

The strong and continued rally in technology and artificial intelligence stocks also played a major role in pushing US equities to new historic highs, as investors welcomed signs of strong demand for AI technologies, alongside a strong earnings season and positive economic data.

However, momentum in technology stocks appeared to slow somewhat on Thursday, as US-listed shares of Arm Holdings fell by 6.9% due to concerns about the company’s ability to secure sufficient supplies for its new AI chips despite its strong profit outlook.

Intel shares also declined by 3.3%, while Advanced Micro Devices (AMD) shares fell by 2%.

By 09:40 a.m. Eastern Time, the Dow Jones Industrial Average rose by 39.22 points, or 0.08%, to 49,949.81 points, while the S&P 500 gained 5.43 points, or 0.07%, to 7,370.55 points, and the Nasdaq Composite added 79.70 points, or 0.31%, to 25,918.64 points.

Six out of the 11 major sectors within the S&P 500 declined, with the energy sector posting the largest drop at 2.1%.

Data showed that the number of Americans filing new claims for unemployment benefits rose by less than expected last week, as layoffs remained low, supporting labor market stability.

After the release of a strong private sector jobs report on Wednesday, investors are awaiting the more comprehensive nonfarm payrolls report on Friday, amid expectations of an increase of 62,000 jobs in April after a rise of 178,000 jobs in March, according to a Reuters survey of economists.

Traders continued betting that the Federal Reserve will keep interest rates unchanged through the end of the year, amid resilient labor market conditions and elevated energy prices. This marks a major shift compared to earlier expectations of multiple rate cuts before the outbreak of the war.

Later today, Minneapolis Federal Reserve President Neel Kashkari, Cleveland Federal Reserve President Beth Hammack, and New York Federal Reserve President John Williams are all scheduled to speak. All three are voting members this year on the Federal Open Market Committee.

In other stock movements, cybersecurity shares rose after Datadog raised its full-year profit forecasts. The company’s stock jumped by 30%, while CrowdStrike and Palo Alto Networks shares rose by 4.8% and 6.4% respectively.

Meanwhile, Snap shares fell by 2.2% after the Snapchat parent company announced that first-quarter advertising revenue had been affected by the Middle East war and slower growth in North America.

Whirlpool shares also dropped by 13% after the home appliance manufacturer missed first-quarter sales estimates and decided to suspend dividend payments.

Advancing stocks outnumbered declining stocks by a ratio of 1.07 to 1 on the New York Stock Exchange, and by 1.09 to 1 on the Nasdaq.

The S&P 500 recorded 13 new 52-week highs against 8 new lows, while the Nasdaq Composite recorded 73 new highs and 34 new lows.