Wall Street ends higher, crude prices ease on potential US-Iran deal extension

Written by Stephen Culp

NEW YORK, May 29 (Reuters) – U.S. stocks trailed global stocks higher and the greenback retreated on Friday as investors neared the end of a holiday-shortened week on renewed hopes of progress on a peaceful resolution to the Iran war.

A narrow, tech-led rally lifted all three major US stock indexes to small gains while US Treasury yields dipped for a fourth straight time, as markets turned the page on a week marked by fears that a fragile deal will collapse amid signs of progress on a peace deal.

The S&P 500 posted its ninth straight weekly gain, its longest win since December 2023.

All three indicators posted monthly improvements.

Despite the rally, the indices were very positive at the closing bell.

The United States and Iran have agreed to extend their ceasefire and lift shipping restrictions as peace talks continue, sources told Reuters, but US President Donald Trump has yet to ratify the deal, which according to Iranian state media, has yet to be finalized.

“These managers watch the markets and like to make big moves when the markets are closed to control messages before the market has a chance to react,” said Ross Mayfield, an investment strategist at Baird in Louisville, Kentucky.

“If the memorandum of understanding is approved by President Trump and we get 60 days to reopen the Strait of Hormuz … I think 60 days should be plenty of time to come to a strong agreement,” he added.

The three-month conflict has put upward pressure on inflation, which threatens to slow growth and intensify as the war drags on.

US Federal Reserve officials are now mulling the possibility of raising interest rates to combat that growing risk.

“The market has been pricing the coin to go up (in the fourth quarter) for a couple of weeks now,” Mayfield said. “We’ll have a lot of data by then, but I don’t expect the Fed to do much of anything.”

The Dow Jones Industrial Average rose 363.68 points, or 0.72%, to 51,032.65, the S&P 500 rose 16.49 points, or 0.22%, to 7,580.12, and the Nasdaq Composite rose 55.15 points, or 6.6% to 0.2%.

European stocks closed modestly and gained for the month, marked by hopes of a deal to reopen the Strait of Hormuz. The closure of the waterway has disrupted the global economy and shocked markets.

MSCI’s index of global shares rose 5.75 points, or 0.51%, to 1,130.47.

The pan-European STOXX 600 index rose 0.14%, while the broader European FTSEurofirst 300 index rose 2.53 points, or 0.10%.

Emerging market shares rose 25.91 points, or 1.50%, to 1,750.60.

Brent crude oil prices fell as the market awaited confirmation that the United States and Iran would extend their agreement to end the deal.

US crude fell 1.73% to settle at $87.36 per barrel, while Brent settled at $92.05 per barrel, down 1.77% on the day.

Treasury yields were lower for the fourth straight session, closing out a week in which reported progress in US-Iran peace talks fueled market optimism.

The yield on the benchmark US 10-year note fell 1.4 basis points to 4.441%, from 4.455% late on Thursday.

The 30-year bond yield fell 0.3 to 4.9817%, from 4.985% late Thursday.

The yield on the 2-year note, which usually moves in line with interest rate expectations at the Federal Reserve, fell 2.9 basis points to 3.996%, from 4.025% late Thursday.

The dollar fell after reports of an interim US-Iran deal.

The dollar index, which measures the greenback against a basket of currencies that includes the yen and euro, was down 0.1% at 98.90, while the euro was up 0.1% at $1.1663.

Against the Japanese yen, the dollar strengthened 0.01% to 159.26.

Gold received a boost on hopes of an end to the war but remained on a monthly downward trend.

Local gold rose 1.18% to $4,545.00 an ounce. US gold futures rose 0.98% to $4,543.60 an ounce.

(Reporting by Stephen Culp; Additional reporting by Iain Withers in London and Tom Westbrook in Singapore; Editing by Joe Bavier, Nick Zieminski and Edmund Klamann)