Wall Street stocks rise, greeting optimism over possible US-Iran deal

Friday marked a positive day for Wall Street stocks as they ended a week of volatility on an optimistic note. The S&P 500, a broad-based index, saw a 0.5% increase. The uptick was driven by falling oil prices and hopes of a US-Iran agreement that could potentially reopen the Strait of Hormuz. Despite mixed signals from the UN General Assembly about the situation between the US and Iran, Iranian Foreign Minister Abbas Araghchi proposed a plan to reopen the Strait within seven days.

However, industry analyst Patrick O Hare cautioned that the offer is questionable as Iran has not altered its conditions from the past. Still, some analysts, like Angelo Kourkafas of Edward Jones, remain hopeful for a diplomatic resolution to the Middle Eastern conflict, citing a 2% drop in oil prices. The mixed signals from the UN General Assembly, coupled with rising interest rates due to inflation fears stemming from a potential Strait closure and Houthi strikes on Saudi Red Sea infrastructure, have led to an increase in government bond yields.

The benchmark US 10-year Treasury yield reached a level not seen since 2007. Moreover, the Bank of England governor Andrew Bailey hinted at potential rate hikes by the Fed and the ECB in the coming months, which could slow economic growth while curbing inflation. A recent meeting between US President Donald Trump and Chinese President Xi Jinping in Washington also contributed to the positive sentiment, with the two leaders confirming plans for a third meeting during international summits in the coming year.

However, US-China trade risks, including tariff disputes, agricultural purchases, rare earths, and technology restrictions, remain unresolved.