U.S. stock index futures traded slightly higher Thursday morning, suggesting Wall Street could see a more restrained advance after the sharp gains recorded over the previous two sessions.
Investor sentiment continued to benefit from optimism surrounding a potential diplomatic resolution to the conflict in the Middle East, though traders appeared cautious about extending the rally too aggressively.
Markets await further progress in U.S.-Iran talks
The recent surge has already pushed both the Nasdaq and the S&P 500 to fresh record highs, leading some investors to look for clearer evidence of progress in negotiations between the United States and Iran before increasing risk exposure further.
President Donald Trump said Wednesday that the U.S. and Iran had held “good talks over the last 24 hours” and indicated confidence that an agreement could be reached within days.
According to a report from Axios, U.S. officials expect Iran to respond within the next 24 to 48 hours to a one-page memorandum of understanding aimed at ending the conflict.
Axios also reported that while some U.S. officials remain doubtful that a final agreement will materialize, the White House is hoping to secure a diplomatic breakthrough before Trump concludes his trip to China next Friday. The report added that military action could resume if negotiations fail to produce a deal by then.
Wall Street extends gains to new record highs
Stocks rallied strongly throughout Wednesday’s session, building on gains from Tuesday and driving both the Nasdaq and S&P 500 to new record closing highs.
The Nasdaq climbed 512.82 points, or 2%, to finish at 25,838.94. The S&P 500 advanced 105.90 points, or 1.5%, to 7,365.12, while the Dow Jones Industrial Average rose 612.34 points, or 1.2%, to close at 49,910.59.
The market rally was fueled in part by optimism that tensions in the Middle East could ease after Axios reported the White House believes it is nearing an agreement with Iran tied to a one-page memorandum of understanding.
Citing U.S. officials and sources familiar with the matter, the report said the proposed arrangement would include Iran agreeing to a moratorium on nuclear enrichment, while both sides would ease restrictions involving transit through the Strait of Hormuz.
Although no formal agreement has yet been finalized, sources told Axios negotiations were at their closest point to a deal since the conflict began.
Further supporting market sentiment, President Donald Trump said the U.S. would temporarily suspend efforts to escort ships through the Strait of Hormuz while awaiting the possible completion and signing of the agreement.
AMD leads technology rally after earnings beat
Technology shares also received a boost from Advanced Micro Devices (NASDAQ:AMD), which surged 18.6% after releasing quarterly results that exceeded analyst expectations on both revenue and earnings.
The chipmaker also issued stronger-than-expected guidance for the second quarter, adding momentum to the semiconductor sector.
U.S. employment data comes in stronger than expected
On the economic front, payroll processor ADP reported that U.S. private sector hiring increased more than anticipated in April.
According to ADP, private payrolls rose by 109,000 jobs during the month, following a revised increase of 61,000 jobs in March.
Economists had expected growth of 85,000 jobs after the previously reported March increase of 62,000.
Gold, airlines and chip stocks rally
Gold-related shares posted some of the session’s strongest gains as bullion prices climbed sharply. The NYSE Arca Gold Bugs Index jumped 7.6%.
Computer hardware stocks also rallied, with the NYSE Arca Computer Hardware Index surging 7.2%.
Airline stocks participated in the broader advance as well, lifting the NYSE Arca Airline Index by 6.9%.
Semiconductor, steel, and biotechnology companies also recorded strong gains during the session.
Meanwhile, energy stocks moved sharply lower alongside declining crude oil prices.