US equities surge as Iran deal momentum builds

US equities rise on Iran deal optimism

United States (US) equity markets closed higher on Friday, bolstered by fresh signs of diplomatic progress towards a US–Iran deal. For the week, the Dow Jones surged 1054 points (+2.13%), notching a new intraday record high along the way. The Nasdaq 100 added 1.22% for its seventh advance in eight weeks, while the S&P 500 tacked on 0.88% to extend its winning streak to eight straight weeks.

That upside momentum has extended into the early stages of the new week after President Trump posted on social media over the weekend that a ‘largely negotiated’ memorandum of understanding (MOU) had been reached to reopen the Strait of Hormuz.

The reported MOU outlines a potential 60‑day ceasefire extension. This framework would allow Iran to sell oil freely, lift the US blockade on its ports, and grant targeted sanctions waivers. It would also kick off critical talks aimed at curbing Tehran’s nuclear program, including binding commitments to never pursue nuclear weapons and negotiations over its enriched uranium stockpiles.

Oil prices fall as markets react

While some of the enthusiasm that initially greeted this news has since been tempered after the Trump administration indicated there was no need to rush the deal, financial markets appear to be giving the reports the benefit of the doubt this morning. This comes despite many similar deals over the past five or six weeks failing to deliver a tangible outcome. US Nasdaq equity futures are trading 1.25% higher at 29,925, and West Texas Intermediate (WTI) crude oil futures are trading 4.70% lower at $92.46, up from the $90.87 (-6.30%) low they hit after the re‑open this morning.

Aside from Middle East headlines, the key economic event this week is Thursday night’s core personal consumption expenditures (PCE) price index, previewed below. The US Q1 2026 earnings season, meanwhile, has entered its home stretch, though not before reports this week from Salesforce, Snowflake, Marvell Technology and a handful of others.

Core PCE price index

Date: Thursday, 28 May at 10.30pm AEST

Last month, the Federal Reserve’s (Fed) preferred inflation gauge – core PCE – rose to 3.2% year‑on‑year (YoY) in March, the highest level since late 2023 and up from 3.0% the prior month.

At the last Federal Open Market Committee (FOMC) meeting in late April, the Fed kept rates unchanged as widely expected but delivered its most divided vote since 1992. Governor Miran pushed for a rate cut, while Presidents Hammack, Kashkari and Logan dissented hawkishly, preferring to remove the easing bias language (‘additional adjustments’) from the statement. The minutes showed a majority of officials open to some policy firming if inflation remains sticky, but the committee stopped short of a clear hawkish pivot, still viewing current policy as appropriately restrictive for now.

Thursday’s April core PCE release will be one of the most important US data points of the week, though even this may take a back seat if reports of a deal lead to the Strait of Hormuz being reopened beforehand. Consensus expects the core reading to rise to 3.3% YoY. The US interest rates market begins the week pricing in a full 25  basis points (bp) Fed rate hike for December.

Core PCE price index annual chart

Nasdaq 100 technical analysis

The Nasdaq 100 began a correction after hitting its late‑October record high of 26,182, before bottoming at the late‑March low of 22,841. From those lows, the index launched a powerful rally that has now brought it within roughly 1% of the 30,000 psychological milestone – a level first flagged on 20 April here.

Looking ahead, a sustained break and close above the 29,660 - 29,680 potential double top would open the door for the Nasdaq 100 to extend its gains towards 32,500, taking it further into overbought territory. A failure to do so would warn that the Nasdaq 100 is continuing to correct the strong run up from the late‑March lows.

Nasdaq 100 daily candlestick chart

Dow Jones technical analysis

Last week’s strong gains propelled the Dow Jones to a fresh record high of 50,835. A push to record highs has been the base case for several weeks, following the strong rally from the late‑March 45,063 low, and comes more than a month after the S&P 500 and the Nasdaq made fresh record highs.

Looking ahead, a sustained break and close above last week’s 50,835 high would open the way for the Dow Jones to extend its gains towards 52,500. A failure to do so would warn of a period of consolidation, with near‑term support viewed at 50,000 and again at 49,500.

Dow Jones daily candlestick chart

• _{Source: TradingView. The figures stated are as of 25 May 2026. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.}