Why are Stocks Up Today? May 06

TLDR

• Dow futures rose 296 points, S&P 500 and Nasdaq 100 futures climbed on Wednesday
• The U.S. and Iran may be close to a one-page peace agreement, per Axios
• Trump paused “Project Freedom,” an escort mission through the Strait of Hormuz
• Oil prices dropped sharply, with Brent falling 6.7% and WTI tumbling 7.3%
• AMD surged 18% after strong earnings; Super Micro Computer jumped 17%

Wall Street futures pointed higher on Wednesday, with the Dow, S&P 500, and Nasdaq all on track to extend their record runs. Two things were driving the optimism: hopes for a U.S.-Iran peace deal and strong results from tech companies.

Futures on the Dow Jones Industrial Average rose 296 points, or 0.6%. S&P 500 futures added 0.6%. Nasdaq 100 futures jumped 1.2%. Both the S&P 500 and Nasdaq closed at record highs on Tuesday.

Axios reported that the Trump administration believes it is close to agreeing on a one-page memorandum of understanding with Iran to end the war. The report cited two U.S. officials and two other sources familiar with the matter.

President Trump added to the optimism late Tuesday. He posted on Truth Social that he had agreed to pause “Project Freedom,” a White House plan to escort commercial ships through the Strait of Hormuz, saying “Great Progress” had been made toward a peace deal.

That news hit oil markets hard. Brent crude futures dropped 6.7% to $102.50 a barrel. West Texas Intermediate futures fell 7.3% to $94.72 a barrel in early trading.

The dollar also weakened. It dropped 0.6% against a basket of peer currencies as demand for safe-haven assets fell. The yield on the 10-year Treasury note slipped 7 basis points to 4.36%.

Tech Earnings Drive Market Confidence

Chipmaker Advanced Micro Devices was a standout on Wednesday. Its stock surged 18% after it beat earnings and revenue estimates. Data-center sales jumped 57%, and the company issued strong guidance for the current quarter.

Super Micro Computer also posted big gains, rising 17% after delivering stronger-than-expected quarterly guidance.

Deutsche Bank analyst Jim Reid said markets had “recovered some poise” over the last 24 hours. He pointed to the U.S.-Iran ceasefire holding and continued optimism around chipmakers as the main drivers.

Earnings Season Broadly Strong

The wider earnings season has been positive. Around 85% of S&P 500 companies that have reported so far have beaten profit expectations. About 77% have delivered better-than-expected revenue.

Jobs data is also in focus this week. The JOLTS report came out Tuesday. The ADP private employment report was due Wednesday. Layoff data from Challenger, Gray & Christmas was set for Thursday.

Several major companies were due to report before the market opened Wednesday, including Novo Nordisk, Walt Disney, and Uber.

Dow futures were up 392 points, or 0.79%, in early trading. S&P 500 futures were at 7,341.25, up 0.74%. Nasdaq 100 futures reached 28,505.75, up 1.31%.

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