US equity markets closed higher on Friday, extending gains from Thursday, driven by optimism surrounding a potential near-term interim peace agreement between the United States and Iran. The S&P 500 Index ($SPX) rose +0.50%, the Dow Jones Industrial Average ($DOWI) gained +0.70%, and the Nasdaq 100 Index ($IUXX) advanced +0.64%.
The rally was further reflected in futures markets, with June E-mini S&P futures (ESM26) climbing +0.65% and June E-mini Nasdaq futures (NQM26) seeing a +0.87% increase. This market performance, as reported by Rich Asplund for Barchart on June 12, 2026, reflects hopes for an agreement in the “next several days” that would end military hostilities, reopen the Strait of Hormuz, and lift the US blockade on Iranian oil exports.
While an interim deal would pave the way for negotiations on “more intractable issues” such as sanctions against Iran, the release of $24 billion of frozen Iranian assets, and the resolution of Iranian nuclear issues, Iran’s leaders reportedly still need to make a final decision on the proposed agreement. The initial spark for this renewed optimism came on Thursday after President Trump canceled planned military strikes against Iran, citing “discussions” with the Iranian leadership. He added that the “time and place of the signing” of a negotiated end to the conflict would “be announced shortly.”
Commodity markets reacted sharply to the geopolitical developments. WTI crude oil prices (CLN26) fell -3.23% on Friday, reflecting expectations of increased supply from Iran and the reopening of the crucial Strait of Hormuz.
Supporting the market’s positive sentiment were stronger-than-expected US consumer sentiment figures. The University of Michigan’s June US Consumer Sentiment Index rose +4.1 to 48.9, surpassing expectations for a rise to 46.0. Furthermore, inflation expectations eased, with the University of Michigan’s June 1-year inflation expectations rate dropping to +4.6% from +4.8% in May, which was weaker than expectations of +4.9%. The June 5-10 year inflation expectations rate also eased to +3.4% from +3.9% in May, weaker than expectations of +3.8%.
Monetary Policy and Bond Markets
Despite easing inflation expectations, the T-note market showed some underlying concern. September 10-year T-notes (ZNU6) fell -5 ticks, pushing the 10-year T-note yield up +2.2 basis points to 4.483%. This was partly due to the 10-year inflation expectations rate rising +1.8 basis points to 2.323%, indicating worries about inflation pressures that are “likely to remain sticky even after the Strait of Hormuz reopens.” The T-note market also experienced carry-over weakness from Thursday, when demand was lackluster for the Treasury’s 30-year bond auction. Markets are currently discounting a mere 4% chance of a +25 basis point rate hike at the upcoming FOMC meeting on June 16-17.
In Europe, government bond yields traded lower. The 10-year German bund yield fell -3.6 basis points to 2.995%, and the 10-year UK gilt yield dropped -6.9 basis points to 4.836%. The European Central Bank (ECB), as expected, recently raised its deposit facility rate by +25 basis points to 2.25% from 2.00% and stated that “The outlook remains uncertain, with upside risks for inflation and downside risks for economic growth.” Swaps data suggests a 37% chance of another +25 basis point ECB rate hike at its next policy meeting on July 23.
Key Stock Movers
The day saw several notable individual stock movements:
- SpaceX Debut: Space Exploration Technologies Corp (SPCX), doing business as SpaceX, made a significant debut, closing at $161 per share, up +19% from its Thursday IPO price of $135. The IPO was “more than four times oversubscribed,” signaling strong investor demand and potentially influencing upcoming IPOs of AI companies like Anthropic and OpenAI. However, some space-linked stocks, including EchoStar (SATS) and Rocket Lab (RKLB), closed down approximately -10% despite the favorable SpaceX debut.
- Chip Sector Strength: Chip stocks largely recovered from early losses, with the iShares Semiconductor ETF (SOXX) rising +1.59% on Friday, building on Thursday’s sharp rally of +8.39%. This strength was attributed to “signs that AI spending is continuing” after Oracle on Thursday reported quarterly capital expenditures that were higher than expected, driven by increased data center spending. Intel (INTC) surged +6.51%, KLA-Tencor Corp (KLAC) gained +5.55%, and both AMD (AMD) and Qualcomm (QCOM) closed up more than +4%.
- Software Sector Weakness: Adobe (ADBE) fell more than -6% following news that CFO Dan Durn would leave the company on June 15, which came after an earlier announcement regarding Adobe’s CEO resignation. This contributed to “continued downward pressure on software stocks,” which were already undercut on Thursday by “negative earnings news from Oracle (ORCL).” Autodesk (ADSK) declined more than -3%, and Palantir Technologies (PLTR) fell more than -2%.
- Airline Gains: Airline stocks, including Southwest Airlines (LUV), United Airlines (UAL), and American Airlines (AAL), saw rallies of more than +2%, benefiting from the continued decline in oil prices.
- Nasdaq 100 Rebalancing: Nasdaq announced additions to its 100 Index, effective at the market open on June 22. These include Astera Labs (ALAB), CoreWeave (CRWV), Nebius Group (NBIS), Rocket Lab (RKLB), and Teradyn (TER). Conversely, Charter Communications (CHTR), Cognizant Technology Solutions (CTSH), Insmed (INSM), Verisk Analytics (VRSK), and Zscaler (ZS) will be removed from the index.
- Travelers: Travelers (TRV) managed a +0.18% gain despite news that Barclays cut its rating on the stock to underweight from equal-weight.
The market’s robust performance on Friday, particularly in key indices and sectors like technology and airlines, underscores the significant impact of geopolitical developments and shifting economic indicators. Hopes for a de-escalation of tensions in the Middle East, coupled with easing domestic inflation expectations, appear to be driving investor confidence, although underlying concerns about long-term inflation persist in bond markets.
