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The US stock markets rose strongly yesterday. The S&P 500 gained 1.75%, the Nasdaq 100 jumped 2.54%, and the Dow Jones Industrial Average added 1.76%.
The rally followed President Donald Trump's statement that the United States had ended the war with Iran. The MSCI Asia Pacific index rose 3.5%— its largest gain in two months — while South Korea's Kospi surged 8.4%. Futures on US indexes point to a continuation of the rally, and European markets are priced to open about 1.8% higher. Brent crude fell about 2% to roughly $88.50 a barrel.
Trump said talks had taken place at the highest levels of Iranian leadership and suggested a signing could occur this weekend in Europe with Vice President Vance attending. The shift was sharp: a few hours earlier he had threatened new strikes on Iran and seizure of its oil infrastructure. Iran has not yet officially confirmed any agreement — the Fars news agency reported that the text has not been approved — which suggests markets are buying hope rather than a signed document, an important caveat for those who have seen this scenario repeat over recent months.
The bond market reaction was instructive. Fed hike expectations shifted from December of this year to the first quarter of 2027 — falling oil prices reduce the inflation narrative and with it pressure on the Federal Reserve. The 10-year US Treasury yield stood at 4.46%. If an agreement is indeed signed over the weekend, Kevin Warsh will face a materially more comfortable backdrop for his first FOMC meeting on Monday–Tuesday: energy-driven inflation should begin to ease, making a tough message to markets less inevitable.
A second major theme of the week is the SpaceX IPO. The company was priced at $135 a share, implying a valuation of $1.77 trillion, and raised $75 billion in the largest IPO in history. Derivatives on online platforms point to a market capitalization near $2.4 trillion on day one of trading — the market is pricing more than a 35 percent gain from the offering price.
SpaceX is only the start of the wave. Anthropic and OpenAI appear to be preparing for public listings as well. Combined with a possible end to the Iran war, this could provide a very strong fundamental base for the second half of the year — if, and only if, negotiations result in a signed agreement this weekend.
A technical outlook for the S&P 500 suggests that the immediate task for buyers today is to overcome resistance at $7,381. Doing so will demonstrate upside momentum and open the way to $7,404. Maintaining control above $7,427 would further strengthen the buyers' case. If downside pressure materializes on a fall in risk appetite, buyers must defend the $7,355 area. A break below that level will quickly push the instrument back to $7,339 and open the path to $7,319.
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