US stocks pushed higher on Friday as investors grew cautiously optimistic that diplomatic talks between the US and Iran could ease tensions in the Middle East and reduce fears of a prolonged oil supply shock. The rebound helped steady sentiment after a volatile week dominated by inflation worries, rising bond yields, and geopolitical uncertainty.
The S&P 500 climbed 0.5%, while the Dow Jones Industrial Average gained 0.6% after hitting another record high on Thursday. The Nasdaq Composite also advanced 0.6% as investors rotated back into technology and AI-linked names. Markets started the week under pressure as soaring oil prices reignited inflation fears, but signs of progress in negotiations between Washington and Tehran helped calm concerns about a major disruption in global energy markets.
Market Movers:
- Rigetti Computing (RGTI) +17% — Quantum computing stocks extended their rally as investors continued piling into companies tied to proposed Commerce Department funding initiatives under the CHIPS and Science Act. Optimism surrounding government-backed quantum and semiconductor investment also lifted peers, including Quantum Computing, D-Wave Quantum, Infleqtion, and IonQ, as traders bet federal support could accelerate development across the sector.
- Dell Technologies (DELL) +15% and HP (HPQ) +15% — Shares surged after strong quarterly results from Lenovo fueled renewed optimism around the global PC recovery and enterprise AI spending. Analysts also turned increasingly bullish on Dell’s AI infrastructure business, with Wells Fargo raising its price target and pointing to accelerating demand for AI servers and enterprise hardware.
- Zoom Communications (ZM) +13% — Zoom jumped after reporting better-than-expected first-quarter earnings and raising its full-year outlook as adoption of its AI products accelerated. CEO Eric Yuan highlighted a 184% increase in paid AI Companion users, reinforcing investor confidence that Zoom is successfully repositioning itself as an AI productivity platform rather than just a video conferencing company.
- Estée Lauder (EL) +10% — Shares rallied after Estée Lauder and Puig announced they had ended merger discussions, easing investor concerns about integration risks and deal uncertainty. The beauty company said it remains focused on its standalone turnaround strategy and ongoing “Beauty Reimagined” transformation efforts.
- Workday (WDAY) +5% — Workday rose after delivering stronger-than-expected earnings and revenue while raising its full-year operating margin forecast. Management pointed to growing momentum in enterprise AI adoption and continued strength in subscription revenue growth.
- NervGen Pharma (NGEN) -43% — Shares plunged after the biotech company announced a deeply discounted public offering alongside warrants, sparking dilution concerns among investors. The company said proceeds will help fund clinical development programs and broader corporate operations.
- Futu Holdings (FUTU) -27% — Futu tumbled after revealing it received a penalty pre-notification letter from Chinese regulators tied to allegations of conducting financial services businesses without proper licenses in mainland China. The proposed penalties and possible restrictions on operations added fresh uncertainty around the company’s regulatory outlook.
- Take-Two Interactive (TTWO) -6% — Shares fell despite reaffirming the November launch date for Grand Theft Auto 6 and issuing upbeat long-term guidance. Investors appeared to lock in profits following the stock’s recent rally, even as analysts continue forecasting blockbuster sales for the highly anticipated game.
Iran Talks and Oil Prices Remain Front and Center
Markets spent much of the week reacting to headlines surrounding negotiations between the US and Iran, with oil prices becoming a major driver of investor sentiment. Concerns over a possible disruption in the Strait of Hormuz — one of the world’s most important oil shipping routes — had pushed crude prices sharply higher earlier in the week and reignited fears of persistent inflation.
By Friday, however, traders appeared encouraged by signs that diplomatic discussions were making progress. Secretary of State Marco Rubio and Iranian media outlets both signaled that negotiations were continuing, helping ease immediate concerns about further escalation in the region. Still, uncertainty remains elevated. Oil prices continue to hover at historically high levels, and investors remain highly sensitive to any developments that could impact global supply chains, inflation expectations, or central bank policy.
Consumer Sentiment Falls to Record Low
Despite the rebound in stocks, new economic data highlighted mounting pressure on consumers as rising fuel and living costs weigh heavily on household finances. The University of Michigan’s consumer sentiment index fell to a record low reading of 44.8 in May as Americans grew increasingly worried about inflation and affordability. High gas prices remained one of the biggest concerns, with national averages approaching $5 per gallon in some regions. Inflation expectations also continued climbing, complicating the Federal Reserve’s policy outlook. Investors are increasingly concerned that sticky inflation could delay potential interest rate cuts and keep borrowing costs elevated longer than previously expected.
Wall Street Watches the Bond Market and New Fed Leadership
Investors also kept a close eye on Treasury yields on Friday after weeks of volatility in global bond markets. The 10-year Treasury yield drifted back toward 4.5%, while the 30-year yield remained above the psychologically important 5% level. At the same time, markets absorbed the formal swearing-in of Kevin Warsh as the new Federal Reserve chair. Warsh signaled that he intends to pursue a reform-oriented approach at the central bank as policymakers navigate stubborn inflation, elevated oil prices, and slowing consumer confidence.
Some strategists argued the bond market may not yet pose a major threat to the broader bull run in equities, especially as corporate earnings growth remains resilient. However, many on Wall Street warned that sustained inflation or deteriorating profit margins could quickly change investor sentiment.
Looking Ahead
Investors will head into next week focused on whether diplomatic momentum with Iran continues and whether oil prices can stabilize after weeks of sharp volatility. Any signs of progress could further ease inflation fears and support equities, particularly technology and growth stocks. Wall Street will also continue monitoring bond yields, consumer spending trends, and the strength of corporate earnings as markets attempt to determine whether the current rally still has room to run. With inflation pressures, geopolitical risks, and AI enthusiasm all colliding at once, volatility is likely to remain a defining theme for investors in the weeks ahead.