Wall St extends rally on Mideast peace deal hopes; Dell surges

By Twesha Dikshit and Utkarsh Hathi

May 29 (Reuters) – Wall Street’s major indexes extended their record run, heading for weekly and monthly gains on Friday, as gains in tech stocks and reports the U.S. and Iran had reached a deal fanned investor optimism. 

The tech sector jumped 2.2%, led by gains in chip stocks.

Dell surged 34.7% after raising its full-year profit and revenue forecasts on Thursday. Peers Hewlett Packard Enterprise and Super Micro Computer gained 13.6% and 17%, respectively.

Sources told Reuters that Washington and Tehran had agreed to extend their ceasefire and lift restrictions on shipping through the Strait of Hormuz, but President Donald Trump was yet to approve it.

All three indexes hit intraday record highs, cruising on renewed optimism around AI and strong earnings growth, despite some concerns about the Iran war’s impact on inflation and the global economy.

“Markets are ending May with a risk-on bias, driven by AI enthusiasm, lower oil prices and growing expectations that U.S.-Iran tensions may remain contained, thanks to an extended ceasefire framework,” said Bob Savage, head of markets macro strategy at BNY.

Nine of the 11 main S&P 500 sectors were in the red. The S&P 500 communications services sector was down 1.2%, as Alphabet dipped 1.5%. 

The Philadelphia SE Semiconductor Index, which has gained more than 70% for the quarter, was up 1.7%. 

The software services index rose almost 4%, erasing all losses since January-end, when concerns over AI disruption had weighed on the sector.

The S&P 500 was on track for a ninth consecutive weekly gain, its longest winning streak since December 2023. The Dow Jones and the Nasdaq were also set to end the week higher. All three indexes are set to log a second straight month of gains.

At 10:05 a.m. ET, the Dow Jones Industrial Average rose 151.04 points, or 0.30%, to 50,820.01, the S&P 500 gained 31.69 points, or 0.41%, to 7,594.98 and the Nasdaq Composite gained 156.47 points, or 0.58%, to 27,073.94.

U.S. economic data on Thursday showed inflation increased at its fastest pace in three years in April, while GDP for the first quarter was revised lower to a 1.6% annual rise.

“At the same time, central banks are still focused on inflation risks, with ECB and Fed officials warning that supply shocks and elevated inflation expectations could keep rate hikes in play as growth sentiment improves,” Savage added.

The Fed’s Kansas President Jeffrey Schmid warned that the energy shock may not be temporary, while Vice Chair for Supervision Michelle Bowman said that a persistent rise in inflation might require tighter monetary policy.

Money markets expect the Federal Reserve to keep interest rates steady for the rest of the year, with some expectations of a 25-basis-point hike in December.

Among other movers, Gap shares tumbled 17.7% after the apparel retailer cut its annual sales forecast, while American Eagle Outfitters dropped 14.9% after keeping its annual comparable sales forecast unchanged. 

Okta jumped 21% after the digital identity verification firm posted first-quarter revenue above expectations. 

Declining issues outnumbered advancers by a 1.05-to-1 ratio on the NYSE and by a 1.03-to-1 ratio on the Nasdaq.

The S&P 500 posted 20 new 52-week highs and 6 new lows while the Nasdaq Composite recorded 76 new highs and 24 new lows.

(Reporting by Twesha Dikshit and Utkarsh Hathi; Editing by Joyjeet Das and Devika Syamnath)