US equities rise on Iran deal optimism
United States (US) equity markets closed higher on Friday, bolstered by fresh signs of diplomatic progress towards a US–Iran deal. For the week, the Dow Jones surged 1054 points (+2.13%), notching a new intraday record high along the way. The Nasdaq 100 added 1.22% for its seventh advance in eight weeks, while the S&P 500 tacked on 0.88% to extend its winning streak to eight straight weeks.
That upside momentum has extended into the early stages of the new week after President Trump posted on social media over the weekend that a ‘largely negotiated’ memorandum of understanding (MOU) had been reached to reopen the Strait of Hormuz.
The reported MOU outlines a potential 60‑day ceasefire extension. This framework would allow Iran to sell oil freely, lift the US blockade on its ports, and grant targeted sanctions waivers. It would also kick off critical talks aimed at curbing Tehran’s nuclear program, including binding commitments to never pursue nuclear weapons and negotiations over its enriched uranium stockpiles.
Oil prices fall as markets react
While some of the enthusiasm that initially greeted this news has since been tempered after the Trump administration indicated there was no need to rush the deal, financial markets appear to be giving the reports the benefit of the doubt this morning. This comes despite many similar deals over the past five or six weeks failing to deliver a tangible outcome. US Nasdaq equity futures are trading 1.25% higher at 29,925, and West Texas Intermediate (WTI) crude oil futures are trading 4.70% lower at $92.46, up from the $90.87 (-6.30%) low they hit after the re‑open this morning.
Aside from Middle East headlines, the key economic event this week is Thursday’s core personal consumption expenditures (PCE) price index, previewed below. The US Q1 2026 earnings season, meanwhile, has entered its home stretch, though not before reports this week from Salesforce, Snowflake, Marvell Technology and a handful of others.
Core PCE price index
Date: Thursday, 28 May at 1.30pm BST
Last month, the Federal Reserve’s (Fed) preferred inflation gauge – core PCE – rose to 3.2% year‑on‑year (YoY) in March, the highest level since late 2023 and up from 3.0% the prior month.
At the last Federal Open Market Committee (FOMC) meeting in late April, the Fed kept rates unchanged as widely expected but delivered its most divided vote since 1992. Governor Miran pushed for a rate cut, while Presidents Hammack, Kashkari and Logan dissented hawkishly, preferring to remove the easing bias language (‘additional adjustments’) from the statement. The minutes showed a majority of officials open to some policy firming if inflation remains sticky, but the committee stopped short of a clear hawkish pivot, still viewing current policy as appropriately restrictive for now.
Thursday’s April core PCE release will be one of the most important US data points of the week, though even this may take a back seat if reports of a deal lead to the Strait of Hormuz being reopened beforehand. Consensus expects the core reading to rise to 3.3% YoY. The US interest rates market begins the week pricing in a full 25 basis points (bp) Fed rate hike for December.