US Stocks Reverse Losses on Iran Deal Report as Oil Pares Gains

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(Bloomberg) — Stocks rebounded from earlier losses on Thursday, as investors reacted to a reported deal between the US and Iran.

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The S&P 500 Index was up 0.5% at 11:28 a.m. in New York, after Axios said the US and Iran have reached a deal to extend a truce and work toward an agreement to end the war. US President Donald Trump still needs to approve the terms, it said.

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Oil prices pared gains on the news. The tech-heavy Nasdaq 100 Index was up 0.8% and the Dow Jones Industrial Average was little changed.

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“The reaction has been a positive one, but not in a major way,” said Matt Maley, chief market strategist at Miller Tabak + Co. The market “has been pricing in this outcome for a long time now.” 

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Investors have embraced signs of progress in US-Iran negotiations while continuing to pile into beneficiaries of the artificial intelligence buildout. The S&P 500 is heading toward its ninth straight week of gains, a streak that has only been matched four times since 1985. 

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The roughly 10% year-to-date climb in the benchmark has rewarded investors that held steady in the face of war-fueled turmoil while also raising concerns over valuations and its heavy concentration in Big Tech.

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“Equities are priced for perfection in a world that’s not that perfect,” Emily Roland, co-chief investment strategist at Manulife John Hancock Investments, said in an interview on Bloomberg TV. Locking in higher bond yields looks attractive given current stock prices, she added.

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Data on Thursday showed inflation-adjusted consumer spending climbed 0.1% in April, in line with expectations. PCE inflation data was cooler than expected for the month. 

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At the same time, weekly jobless claims rose by 5,000 last week, coming in above expectations. The US economy also grew at a slower-than-expected pace in the first quarter, with GDP expanding at 1.6% , short of economist forecasts for 2% growth and down from 2% in the prior quarter.

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“In conjunction with healthy economic data so far into Q2, the readings point to a resilient economy withstanding a prolonged war and inflationary pressures,” said Adam Hetts, global head of multi-asset and portfolio manager at Janus Henderson Investors.

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Multiple Federal Reserve speakers raised inflation concerns in comments overnight, including Chicago Fed President Austan Goolsbee, who said that productivity spending may fuel rising prices. Minnesota Fed President Neel Kashkari called inflation his top priority.

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Among single-stock movers, software maker Snowflake Inc. shares soared after providing a better-than-expected sales outlook and inked a $6 billion agreement to use Amazon.com Inc.’s cloud services and chips.