Stocks Edge Higher as Iran Ceasefire Talks Calm Nerves, but Traders Stay Cautious

CNBC, the Wall Street Journal, and Market Watch contributed to this report.

The S&P 500 rose Thursday after a report said negotiators had struck a deal to extend the Iran ceasefire, though traders were still treating the news with care.

The broader index and the Nasdaq Composite each climbed 0.5% and 0.6%, respectively, and both touched fresh record highs. The Dow Jones Industrial Average added 17 points and was basically unchanged.

Markets hit their peak after Axios, citing two US officials and a regional source, reported that US and Iranian negotiators had agreed to a 60-day memorandum of understanding to extend the ceasefire and keep talks going on Iran’s nuclear program. Even so, the agreement was still waiting on President Donald Trump’s final sign-off, according to the report.

“The market has been expecting some type of MOU – memorandum of understanding – here,” said David Wagner, head of equities at Aptus Capital Advisors. “You’re going to see the discretionary names run as a first knee-jerk reaction to a lot of this news, which can drive the market higher.”

Oil gave back some of its earlier gains after the report. West Texas Intermediate crude was last above $89 a barrel, while Brent traded around $95. Both had moved higher earlier in the day after Iran’s Revolutionary Guard said it targeted a US airbase, according to Tasnim News Agency. That followed new US strikes on a military site in Iran.

A separate piece of data also helped cool some inflation fears. The April personal consumption expenditures price index rose 0.4% month over month, while the 12-month inflation rate came in at 3.8%, the Commerce Department said. Economists surveyed by Dow Jones had expected 0.5% and 3.8%, respectively.

The softer monthly reading gave investors a bit of relief that price pressures may be easing, even though the annual rate still sits well above the Federal Reserve’s 2% target.

Snowflake was one of the day’s biggest winners, soaring about 35% after the cloud data company issued stronger-than-expected guidance for its fiscal second quarter and beat on first-quarter earnings and revenue. It also said it plans to spend $6 billion on Amazon Web Services over five years.

Earlier this week, falling oil prices helped push the Dow to a record intraday and closing high on Wednesday. Crude had slid after Secretary of State Marco Rubio said at a White House Cabinet meeting that talks with Iran had made progress and that the administration wanted to give diplomacy every chance to work. Trump, however, said he would not allow Iran to control the Strait of Hormuz as part of any deal.

Those comments came after Iranian state television said Tehran was committed to restoring commercial traffic through the Strait of Hormuz to prewar levels within a month of an agreement with the US, Reuters reported. The White House later dismissed the memorandum report as “a complete fabrication.”

On the sentiment side, individual investors stayed unusually pessimistic for a 16th straight week, according to the American Association of Individual Investors. In the latest survey, 41.9% said they were bearish on stocks over the next six months, above the long-term average of 31.0%. Bullish sentiment rose to 35.6% from 31.7% a week earlier, but still trailed the average of 37.5%.

Breadth in the S&P 500 was mixed through midday, with gains and losses split fairly evenly. Health care and information technology led the way, while utilities and consumer staples lagged.

Stocks also got a lift from a few big movers. Drone names rallied after a Wall Street Journal report said the Trump administration was considering an industry investment. Unusual Machines jumped more than 30%, while Kratos Defense and Security Solutions, AeroVironment and the Defiance Drone and Modern Warfare ETF also climbed.

Elsewhere, Best Buy rose after posting better-than-expected earnings and revenue, Kohl’s surged on improving comparable sales, and Caesars Entertainment edged higher after a $17.6 billion buyout was announced.