Stocks Settle Sharply Higher on Middle East Peace Hopes

The S&P 500 Index ($SPX) (SPY) on Thursday closed up +1.75%, the Dow Jones Industrial Average ($DOWI) (DIA) closed up +1.86%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +3.29%.  June E-mini S&P futures (ESM26) rose +1.73%, and June E-mini Nasdaq futures (NQM26) rose +3.26%.

Stock indexes settled sharply higher on Thursday, after geopolitical risks eased when President Trump canceled planned strikes on Iran and signaled that a peace deal to end the war was imminent.  Chipmakers and other AI-related stocks rallied on Thursday, leading the broader market higher.  Also, Thursday’s -2% plunge in WTI crude oil sparked a rally in airline stocks and cruise line operators.  However, software stocks retreated on Thursday, led by an -8% slump in Oracle after it reported higher-than-expected capital expenses, driven by increased data spending.

Stocks raced to their highs Thursday afternoon when President Trump said he canceled planned military strikes against Iran, citing "discussions" with Iranian leadership.  He added that a "time and place of the signing" of a negotiated end to the war would "be announced shortly," and the US naval blockade of the Strait of Hormuz "will remain in full force and effect until this transaction is finalized."

Stocks were initially weighed down on Thursday amid concerns about the escalation of Middle East hostilities after President Trump said the US will be hitting Iran very hard tonight and will "at some point" take control of Kharg Island, Iran's key export hub, thus taking control of Iran's oil and gas markets.

Stocks were also pressured by Thursday’s US economic reports, which showed that weekly US jobless claims unexpectedly rose to a 4-month high and that May producer prices were mixed. 

Late Wednesday, President Trump said the US will continue bombing Iran if it refuses to agree to an interim peace deal.  Mr. Trump ordered multiple strikes on Iranian targets on Wednesday, and Iran retaliated by firing on US bases in Kuwait, Bahrain, and Jordan.  The increase in tensions risks derailing peace talks between Iran and the US, thus keeping the Strait of Hormuz closed, and further tightening global energy supplies.

US weekly initial unemployment claims unexpectedly rose +4,000 to a 4-month high of 229,000, showing a weaker labor market than expectations of a decline to 220,000. 

US May PPI final demand rose +1.1% m/m and +6.5% y/y, stronger than expectations of +0.7% m/m and +6.4% y/y, with the +6.5% y/y gain being the largest year-on-year increase in 3.5 years.  However, May PI ex food and energy rose +0.4% m/m and +4.9% y/y, weaker than expectations of +0.5% m/m and +5.4% y/y.

WTI crude oil prices (CLN26) are extremely volatile, whipsawing higher and lower several times on Thursday.  Crude prices today initially gave up an overnight advance of more than +2% and fell more than -2% after President Trump said he canceled planned strikes on Iran and that a peace deal to end the war was imminent.  Crude prices initially rallied more than +2% on Thursday when President Trump said the US would keep attacking Iran and threatened to seize the Kharg Island oil terminal, Iran’s main crude exporting hub.

The markets are discounting a 0% chance of a +25 bp rate hike at the next FOMC meeting on June 16-17.

Overseas stock markets settled mixed on Thursday.  The Euro Stoxx 50 closed up +0.78%.  China's Shanghai Composite closed down -0.16%. Japan's Nikkei Stock Average recovered from a 2.5-week low and closed up +0.06%.

Interest Rates

September 10-year T-notes (ZNU6) on Thursday closed up +17 ticks, and the 10-year T-note yield fell -9.3 bp to 4.459%.  T-notes rallied on Thursday after US weekly jobless claims unexpectedly rose to a 4-month high and May producer prices ex-food and energy rose less than expected, dovish factors for Fed policy.  T-notes also garnered support on Thursday from the -2% fall in WTI crude oil prices, which lowered inflation expectations.  The 10-year breakeven inflation rate fell to a 2.5-month low of 2.303% on Thursday.  

Gains in T-notes were limited after stocks rallied sharply, which curbed safe-haven demand for government debt securities.  Also, slack demand for the Treasury’s $22 billion auction of 30-year T-bonds was negative for T-notes, as the auction had a bid-to-cover ratio of 2.33, below the 10-auction average of 2.39. 

European government bond yields moved lower on Thursday.  The 10-year German Bund yield fell from a 2.5-week high of 3.091% and finished down -4.5 bp to 3.032%.  The 10-year UK gilt yield fell -2.6 bp to 4.905%.

The ECB, as expected, raised the deposit facility rate by +25 bp to 2.25% from 2.00% and said, "The outlook remains uncertain, with upside risks for inflation and downside risks for economic growth."

The ECB cut its 2026 Eurozone GDP estimate to +0.8% from a previous estimate of +0.9% and raised its 2026 Eurozone inflation ex-food and energy forecast to +2.5% from a previous forecast of +2.3%.

Swaps are discounting a 62% chance of a +25 bp ECB rate hike at its next policy meeting on July 23.

US Stock Movers

Chipmakers and AI-infrastructure stocks rallied sharply on Thursday amid signs that AI spending is continuing after Oracle reported quarterly capital expenditures that were higher than expected, driven by increased data center spending.  Sandisk (SNDK) closed up more than +14% to lead gainers in the S&P 500 and Nasdaq 100, and KLA Corp (KLAC) closed up more than +13%.  Also, Lam Research (LRCX) closed up more than +12%, and Applied Materials (AMAT), ARM Holdings Plc (ARM), Marvell Technology (MRVL), and Micron Technology (MU) closed up more than +11%.  In addition, Intel (INTC) and ASML Holding NV (ASML) closed up more than +9%, and Advanced Micro Devices (AMD) and Western Digital (WDC) closed up more than +7%.  Finally, Seagate Technology Holdings Plc (STX), NXP Semiconductors NV (NXPI), and Qualcomm (QCOM) closed up more than +6%, and Microchip Technology (MCHP) and Texas Instruments (TXN) closed up more than +5%. 

Airline stocks and cruise line operators moved sharply higher on Thursday after WTI crude oil fell more than -2%, lowering fuel costs and boosting the companies’ profitability prospects.  Alaska Air Group (ALK) closed up more than +11%, and United Airlines Holdings (UAL) and American Airlines Group (AAL) closed up more than +9%.  Also, Carnival (CCL) closed up more than +8%, and Southwest Airlines (LUV) and Royal Caribbean Cruises (RCL) closed up more than +7%.  In addition, Norwegian Cruise Line Holdings (NCLH) and Delta Air Lines (DAL) closed up more than +6%.

Cryptocurrency-exposed stocks moved higher on Thursday as Bitcoin (^BTCUSD) rose more than +3%. Galaxy Digital Holdings (GLXY) closed up more than +10%, and Riot Platforms (RIOT) closed up more than +8%.  Also, MARA Holdings (MARA) closed up more than +7%, Coinbase Global (COIN) closed up more than +4%, and Strategy (MSTR) closed up more than +3%.

Software stocks are under pressure today, limiting gains in the overall market, with Oracle (ORCL) down more than -8% to lead losers in the S&P 500 after forecasting full-year capital spending of $70 billion, $20-25 billion higher than expected due to prepayment for some components.  Also, Autodesk (ADSK) closed down more than -7% to lead losers in the Nasdaq 100, and Adobe Systems (ADBE) closed down more than -6%.  In addition, Workday (WDAY) closed down more than -5%, and Salesforce (CRM) closed down more than -2% to lead losers in the Dow Jones Industrials.  Finally, ServiceNow (NOW), Atlassian Corp (TEAM), and Intuit (INTU) closed down more than -2%, and Microsoft (MSFT) closed down more than -1%.

Energy stocks and service providers slumped on Thursday after WTI crude oil fell more than -2%.  Devon Energy (DVN) closed down more than -4%, and ConocoPhillips (COP) and APA Corp (APA) closed down more than -3%.  Also, Chevron (CVX), Diamondback Energy (FANG), Exxon Mobil (XOM), and Occidental Petroleum (OXY) closed down more than -2%.

Voyager Technologies (VOYG) closed up more than +16% after BTIG initiated coverage on the stock with a buy recommendation and a price target of $55. 

Navan (NAVN) closed up more than +9% after raising its full-year revenue forecast to $907 million-$913 million from a previous estimate of $866 million-$874 million, well above the consensus of $871.7 million. 

Eaton Corp Plc (ETN) closed up more than +5% after agreeing to merge its mobility business with Dana Inc in a deal valuing the combined company at roughly $10 billion, including debt. 

Allegion Plc (ALLE) closed up more than +3% after Longbow Research upgraded the stock to buy from neutral with a price target of $165.

Earnings Reports(6/12/2026)

America's Car-Mart Inc/TX (CRMT), Atlantic International Corp (ATLN), Friedman Industries Inc (FRD), Liberty Live Holdings Inc (LLYVA), Pioneer Bancorp Inc/NY (PBFS), Richtech Robotics Inc (RR), Seneca Foods Corp (SENEB), Whitestone REIT (WSR).