On the 25th, U.S. time, the three major U.S. stock indexes in New York closed higher across the board. Optimism that the United States and Iran could enter cease-fire talks spread across the market, lifting investor sentiment. The fact that international oil prices, long blamed for driving inflation, turned lower also worked as a positive for the market.
On the New York Stock Exchange (NYSE), the Dow Jones Industrial Average, which gathers 30 blue-chip stocks, finished at 46,429.49, up 305.43 points, or 0.66%, from the prior session. The large-cap-focused S&P 500 rose 0.54% to 6,591.90. The tech-heavy Nasdaq composite also gained 0.77% to close at 21,929.83, extending strength.
The key factor steering the market's direction was the potential easing of geopolitical tensions in the Middle East. According to reports compiled from AP and the New York Times, the United States delivered a peace proposal with 15 items to Iran via Pakistan. President Donald Trump said on social media that the two countries had "very good and productive talks" about ending hostilities in the Middle East. Trump added, "Iran is saying things that make sense," and "the two countries are currently negotiating." The White House also officially confirmed it had held productive talks with Iran over the past three days.
However, uncertainties that could ignite the market still remain. Iran's state media Press TV and others reported that Iran rejected the U.S. cease-fire proposal. Instead, Iran maintained a hard-line stance by counterproposing five items, including securing control over the Strait of Hormuz and payment of war reparations. The Wall Street Journal (WSJ) reported that the United States is deploying the Army's 82nd Airborne Division to the Middle East, reinforcing the view that the gap the two countries need to bridge remains wide.
Even amid the mixed headlines, international oil prices fell and stabilized. West Texas Intermediate (WTI) futures fell 2.2% to end at $90.32 per barrel. Brent, the benchmark that reflects the broader trend in global oil prices, also declined 2.17% to $102.22. Lower oil prices reduce the expense burden that corporations must shoulder and ease inflation concerns, which is seen as a tailwind for stocks.
Wall Street analysts said stocks are moving to price in the likelihood of a cease-fire. Still, they warned the market could swing widely depending on how talks proceed.
Elias Haddad of Brown Brothers Harriman analyzed that the market, despite strategic ambiguity, is aligning toward a resolution of the conflict. Haddad said the decisive variable for ending the fear-driven market is how Iran responds to the U.S.-led effort to ease tensions.
Keith Buchanan, a portfolio manager at Globalt Investments, said the market is eager for clear clues on the course of the war. Buchanan warned that if oil stays elevated for long, expectations for inflation and the Federal Reserve's rate policy will inevitably come under pressure. JPMorgan's trading desk said in a note to clients that it is unclear whether Iran will withdraw its existing demands, but the market seems inclined to rebound from current levels.
Tech stocks led the day's rally and lifted overall sentiment. Core semiconductor names such as Nvidia, AMD and Intel jumped in unison, driving the indexes higher. Shares of the U.K.-based chip design company Arm Holdings also advanced on favorable reviews. Investment bank Raymond James raised its rating on Arm Holdings to outperform and lifted its price target to $166. The firm gave high marks to Arm's attempt at a new fabless-focused strategic pivot, including unveiling its own central processing unit (CPU) chips to capture surging demand for artificial intelligence (AI) data centers.
By contrast, corporations hit by company-specific negatives could not escape weakness. Micron Technology fell nearly 4% in afternoon trading, extending its losing streak to five sessions. Selling accelerated as investors questioned the outlook for gross margin, the yardstick they use to gauge the company's profitability.
U.S. airline JetBlue jumped 18% right after reports that it had contacted advisers to pursue a merger with a rival. Biotech company Thermo Fisher Scientific showed a steady tone on news that it completed its acquisition of AI-driven data-collection specialist Clario Holdings. Bank of America said the deal could allow Thermo Fisher Scientific to significantly accelerate the pace of clinical trials essential for drug approvals.