Wall Street Rises, European Stocks Pare Losses on US-Iran Truce Extension Reports

US-Iran Truce Extension Boosts Markets

Wall Street turned higher on Thursday and European shares pared their losses following reports that the United States and Iran have reached an agreement to extend the ceasefire and launch negotiations. This welcome development came after the two nations exchanged air strikes, boosting market sentiment.

Market Overview

The S&P 500 and the Nasdaq reversed earlier losses, setting course for record closing highs, while European shares, though off session lows, closed lower on the day. The United States and Iran have agreed to a memorandum-of-understanding that extends the truce for another 60 days to allow for negotiations, pending approval from U.S. President Donald Trump.

Economic Data and Fed Expectations

First-quarter U.S. GDP grew at a more sluggish pace than originally reported, the saving rate sank to its lowest level since June 2022, inflation continued to heat up, and new orders for core-capital goods unexpectedly dropped. The combination of weak GDP and rising price growth presents the Federal Reserve with a dilemma. Analysts point to a stagflation problem, suggesting a Fed rate hike is getting closer.

Commodities and Currency Markets

Oil prices were split; U.S. WTI edged higher while Brent dipped. U.S. Treasury yields turned lower following weaker-than-expected economic data and news of the potential interim deal. The dollar edged lower, with the euro and yen gaining. Gold prices pared earlier losses and rose on inflation data and ceasefire extension reports.