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

New York: Wall Street stocks rallied on Friday, concluding a turbulent week on an optimistic note, as a potential US-Iran agreement brought relief to markets. The broad-based S&P 500 closed up 0.5%, while major US indices remained in positive territory throughout the session. The favorable movement stemmed from a decline in oil prices, driven by hopes for a diplomatic breakthrough that could lead to the reopening of the Strait of Hormuz.

Despite conflicting statements from US President Donald Trump and Iranian President Masoud Pezeshkian in UN speeches, Iranian Foreign Minister Abbas Araghchi presented a proposal that included reopening the Strait of Hormuz within a week. However, Patrick O'Hare, an analyst at Briefing.com, cautioned that Iran's conditions have remained unchanged, leaving investors uncertain about the longevity of the deal's allure.

Angelo Kourkafas of Edward Jones noted that the market's response was tempered by the coexistence of rising interest rates and fluctuating energy prices, amidst solid corporate and economic fundamentals. Investors appeared to adopt a cautiously optimistic outlook, contributing to a two percent decrease in oil prices.

However, the market's trajectory was influenced by concerns over inflation stemming from potential disruptions in oil and gas supply due to the Strait of Hormuz closure, as well as the risk of additional supply cuts caused by Houthi strikes on Saudi infrastructure in the Red Sea. These factors caused government bond yields to rise, prompting investors to demand higher returns on their investments.

The Bank of England's governor, Andrew Bailey, hinted at the possibility of interest rate hikes by the European Central Bank and US Federal Reserve in the coming months. This could help curb inflation but might also slow down economic growth.

Equities benefited from a reportedly cordial meeting between US President Donald Trump and his Chinese counterpart Xi Jinping. This positive development lifted investor sentiment, but the nations' extension of a trade truce by two months until January was considered short of the two-year wait the Chinese had hoped for. Key issues such as tariffs, agricultural purchases, rare earths, and technology restrictions remained unresolved.

Trump mentioned discussing the stalled Iran situation with Xi during their meeting, and both leaders agreed to meet for a third and fourth time this year at international summits in China and the United States.