US Stocks Rise Amid Cooling Middle East Tensions

The US stock market closed higher on Friday, with the Dow Jones Industrial Average up 0.30%, the S&P 500 up 0.32%, and the Nasdaq Composite up 0.66%. The sudden cooling of Middle East risks was seen as a key factor in the market's performance.

Russian media reported that the US and Iran have reached consensus on ceasefire terms, including free navigation through the Strait of Hormuz, and are expected to announce them in the coming days. Iran and Oman have also reached a temporary understanding on routes that allows only commercial vessels to pass, strictly prohibits military vessels from entering, and plans to discuss a permanent solution within 30-60 days.

The news led to a sharp fall in oil prices, with WTI crude down 4.57% and Brent crude plunging more than 5%. The pullback in oil prices directly eased inflation concerns, while weak economic data gave US Treasuries a breather. The 10-year Treasury yield fell about 7 basis points to around 4.62%, and the 30-year Treasury yield also fell about 6 basis points to around 5.17%.

The impact of Treasury Secretary Bessent's expansion of the long-term Treasury buyback program is also playing out, with US Treasuries clearly outperforming interest rate swaps of the same maturity. However, this bond rebound remains controversial, with Stanley Druckenmiller arguing that the Treasury should not artificially suppress yields.

The AI hardware sector staged a technical rebound overnight, led by Nvidia's 2.19% rise after launching the Jetson Orin Nano 2 robotics computer. The company's earnings report is due tonight, and investors are watching closely to see whether it can beat expectations and continue to support valuations.