U.S. stock futures pointed to another positive session on Wednesday, suggesting markets could build on the strong gains recorded in the previous trading day.
Investor sentiment improved following renewed optimism that the conflict in the Middle East could move toward a diplomatic resolution, helped by a positive report from Axios.
According to Axios, citing two U.S. officials and two additional sources familiar with the discussions, the White House believes it is nearing a one-page memorandum of understanding with Iran aimed at ending the war.
The proposed arrangement would reportedly see Iran agree to halt nuclear enrichment activities, while the U.S. would ease sanctions and release billions of dollars in frozen Iranian assets. The framework would also involve both countries easing restrictions tied to shipping through the Strait of Hormuz.
Although the report stressed that no final agreement has yet been reached, sources told Axios the negotiations represent the closest progress toward a deal since the conflict began.
Further supporting market optimism, President Donald Trump said the U.S. would temporarily suspend efforts to escort commercial ships through the Strait of Hormuz while talks continue to determine whether a formal agreement can be completed.
At the same time, Trump tempered expectations in a separate Truth Social post, warning that the U.S. would resume bombing Iran “at a much higher level and intensity than it was before” if negotiations fail.
“Even without a fully detailed agreement, the mere progress toward a framework for de-escalation is enough to alter how risk is being priced,” said Daniela Hathorn, Senior Market Analyst at Capital.com.
“However, it is important to stress that this is still a fragile step rather than a definitive resolution,” she added. “A one-page memo suggests that many key details remain unresolved, and past experience has shown that negotiations can quickly stall or reverse.”
Technology stocks also helped support futures, led by a sharp rally in AMD (NASDAQ:AMD), whose shares surged 15.3% in premarket trading.
AMD jumped after reporting first-quarter results that beat analyst expectations on both earnings and revenue while also issuing stronger-than-expected second-quarter guidance.
On the economic front, payroll processor ADP released data showing U.S. private sector hiring increased more than expected in April.
ADP said private payrolls rose by 109,000 jobs during the month after March’s gain was revised down to 61,000 from the originally reported 62,000.
Economists had expected an increase of 85,000 jobs.
Stocks had already staged a strong rebound on Tuesday after early weakness, with both the Nasdaq Composite and the S&P 500 fully recovering Monday’s losses and finishing at record closing highs.
Although the major indexes pulled back from intraday peaks late in the session, gains remained substantial. The Nasdaq advanced 258.32 points, or 1%, to close at 25,326.13, while the S&P 500 gained 58.47 points, or 0.8%, to 7,259.22. The Dow Jones Industrial Average rose 356.35 points, or 0.7%, to 49,298.25.
A sharp decline in oil prices also boosted equities. U.S. crude futures dropped more than 3% after surging over 4% on Monday.
Oil retreated as fears surrounding escalating Middle East tensions eased. Secretary of War Pete Hegseth said the U.S.-Iran ceasefire was “not over” despite Iranian attacks targeting the United Arab Emirates.
“Ultimately the President is going to make a decision whether anything were to escalate into a violation of a ceasefire,” Hegseth said. “Right now, the ceasefire certainly holds but we’re going to be watching very, very closely.”
Chairman of the Joint Chiefs of Staff Gen. Dan Caine also said Iran’s attacks remained “below the threshold of restarting major combat operations at this point.”
Hegseth added that two U.S. commercial vessels and accompanying American destroyers had successfully passed through the Strait of Hormuz, declaring the “lane is clear.”
Corporate earnings also remained a positive catalyst for equities. U.S.-listed shares of Anheuser-Busch InBev (BUD) jumped 8.7% after the brewer posted quarterly results that beat expectations on both revenue and earnings.
Meanwhile, fresh economic data from the Institute for Supply Management showed modest slowing in U.S. services sector growth during April.
The ISM services PMI eased to 53.6 from 54.0 in March, while remaining above the 50 level that signals expansion. Economists had expected a reading of 53.7.
Technology-related sectors led Tuesday’s rally.
Computer hardware stocks surged, pushing the NYSE Arca Computer Hardware Index up 4.4% to a record close.
Semiconductor shares also rallied strongly, with the Philadelphia Semiconductor Index climbing 4.2% to another all-time closing high.
Intel (NASDAQ:INTC) helped drive chip stocks higher after Bloomberg reported that Apple (NASDAQ:AAPL) had explored the possibility of using Intel to manufacture processors for its devices in the United States.
Airline, steel and housing stocks also posted notable gains as buying interest broadened across most major market sectors.