The major U.S. stock indices closed mixed, but the technology-heavy Nasdaq indices continued to outperform. Both the Nasdaq Composite and Nasdaq 100 finished at record closing levels, while the S&P 500 ended virtually unchanged and the Dow declined.
Hopes for progress toward ending the war with Iran helped support sentiment and pushed crude oil modestly lower. President Trump expressed optimism that negotiators Steve Witkoff and Jared Kushner could reach an agreement, including the renewed flow of oil through the Strait of Hormuz.
However, the diplomatic situation remains fluid. Reports said the U.S.-Iran meeting had been planned in advance and focused on reopening negotiations and the Strait of Hormuz. No agreement was reached on most of the disputed issues, although another meeting is expected in the coming days. The prime minister of Qatar also participated in the discussions.
Iranian state media reported that Iran’s conditions for reopening the Strait were the reason it accepted Witkoff’s request for the meeting. Strict conditions were reportedly presented to the U.S. representatives.
In other words, there may be momentum toward further negotiations, but there is not a deal yet.
U.S. stock market closing levels
- Dow Industrial Average: Fell 185.00 points, or -0.36%, to 51,869.20
- S&P 500: Rose 0.11 points, or 0.00%, to 7,764.80
- Nasdaq Composite: Rose 122.18 points, or +0.45%, to a record 27,244.28
- Russell 2000: Rose 14.56 points, or +0.51%, to 2,889.92
- Nasdaq 100: Rose 250.04 points, or +0.82%, to a record 30,732.40
The Nasdaq 100 was the strongest of the major indices, gaining 0.82%. The Russell 2000 also posted a solid advance, suggesting the buying was not limited entirely to the largest technology companies. Nevertheless, the Dow’s decline and the flat S&P 500 close showed that overall market performance remained uneven.
Treasury yields edge lower
U.S. Treasury yields moved modestly lower across the curve:
- 2-year yield: 4.7427%, down 1.0 basis point
- 5-year yield: 4.8273%, down 0.6 basis point
- 10-year yield: 4.9552%, down 0.8 basis point
- 30-year yield: 5.2953%, down 0.1 basis point
The declines were not large, but they provided a more favorable backdrop for growth stocks. Lower yields reduce some of the valuation pressure on technology shares whose expected earnings are further out in the future. That helped the Nasdaq indices outperform and close at new records.
Crude oil falls amid tentative diplomatic optimism
WTI crude oil is trading at $94.59 near the end of day, down $0.57, or -0.6%. The price traded in a wide range between $92.40 and $97.42.
The decline reflected some hope that negotiations could eventually restore more normal oil flows through the Strait of Hormuz. However, the wide trading range demonstrates that traders remain sensitive to every geopolitical headline.
A confirmed agreement would likely remove more of the geopolitical risk premium from oil. Conversely, a breakdown in negotiations or renewed military escalation could quickly put upward pressure back on prices.
What traders can learn from today’s market
Today’s price action provides a reminder that markets trade expectations before they trade completed outcomes.
There was no comprehensive agreement between the U.S. and Iran, but evidence of communication and the prospect of additional meetings were enough to support equities and weigh modestly on crude oil.
That does not mean traders should assume a deal is inevitable. Headlines may start a move, but follow-through confirms it. For stocks, traders will now watch whether the Nasdaq indices can stay above their previous record-closing levels. For oil, the next clue will come from whether sellers can keep the price below the recent highs as negotiations continue.
A record close is bullish, but staying above the breakout level is what gives the buyers greater control.
This article was written by Greg Michalowski at investinglive.com.