US stock markets ended the week at record highs, extending one of their strongest rallies in recent years as easing geopolitical tensions, lower oil prices, supportive comments from Federal Reserve officials and continued strength in technology stocks boosted investor sentiment.
The holiday-shortened trading week saw all three major US indices register gains. The Dow Jones Industrial Average advanced 0.72%, while the S&P 500 rose 0.22% and the Nasdaq Composite added 0.20%. The gains helped the S&P 500 complete its ninth consecutive week of advances.
On Friday alone, S&P 500 gained 16.43 points to close at 7,580.06, marking its fourth consecutive record closing high. The Dow Jones Industrial Average climbed 363.49 points to 51,032.46, while the Nasdaq rose 55.15 points to finish at 26,972.62. Tech-heavy Nasdaq 100 also gained 0.4%, while the Dow rose 0.7%.
The rally came despite lingering concerns that the fragile peace process in the Middle East could unravel. Investors, however, chose to focus on signs of progress in negotiations between the United States and Iran, which helped calm fears around energy supply disruptions and inflation.
Why US markets rallied this week
A major driver of the market’s gains was growing optimism surrounding ceasefire negotiations between the United States and Iran. Reports suggested that both countries had agreed to extend their ceasefire and lift restrictions on shipping through the strategically important Strait of Hormuz, although US President Donald Trump had yet to formally approve the agreement and Iranian state media said the deal had not been finalised.
The prospect of smoother energy flows through the region pushed oil prices lower and eased inflation concerns. Global Brent crude prices fell towards the $87 per barrel mark during the week, while on Friday the August Brent crude contract declined 1.7% to settle at $91.12 per barrel. US crude oil for July delivery also dropped 1.7% to $87.36 per barrel.
Lower oil prices helped support bond markets as well. The yield on the benchmark US 10-year Treasury note eased to 4.44% from 4.45% a day earlier and has now declined for four consecutive sessions. The 30-year Treasury yield also edged lower to 4.9817%.
However, the dollar weakened amid reports of progress in the US-Iran talks. The dollar index slipped 0.1% to 98.90, while the euro gained 0.1% to $1.1663.
Another major reason for the rise was the rally in technology stocks, which continued to be the biggest force behind Wall Street’s record-breaking run. The technology sector within the S&P 500 surged more than 15% in May, even as most other sectors in the benchmark index declined.
One of the standout performers was Dell Technologies, whose shares soared nearly 30% after the company raised its sales outlook well above Wall Street expectations. The company cited approximately $60 billion in expected revenue from AI servers as a key growth driver.
Investors were also looking out for any update on the Federal Reserve policy. Markets are currently expecting the Federal Reserve to keep interest rates unchanged at its next meeting and potentially throughout the remainder of the year. While lower rates could support economic growth by reducing borrowing costs, policymakers remain cautious as inflation pressures persist.
(With input from agencies)
