Hopes for a deal between the United States and Iran aimed at transforming a fragile ceasefire into sustained peace have boosted Wall Street, propelling stocks towards their longest stretch of weekly gains since 2023.
Following an 18% rebound from lows induced by the conflict, the S&P 500 was on track for an eighth consecutive week of gains. Two-year Treasury yields reached their highest level since February 2025 as Federal Reserve Governor Christopher Waller indicated that the next interest rate decision could lead to either a hike or a cut. Money markets had fully priced in a rate increase for this year, even as US oil prices settled above $96 per barrel during a fluctuating session.
Almost three months into the conflict, Iran is reviewing the latest proposal from the US. Pakistan’s army chief, acting as a favored intermediary between Washington and Tehran, has arrived in Tehran. US Secretary of State Marco Rubio reported “slight progress” in the negotiations.
However, the Islamic Republic News Agency quoted Iran’s Foreign Ministry Spokesman Esmail Baghaei stating that Iran is not close to a deal with the US and that the meeting with the Pakistani army chief is not indicative of imminent agreement, focusing instead on ending the conflict.
Steve Sosnick from Interactive Brokers noted that the rise in equities ahead of the three-day weekend in the US reflects traders’ attitudes towards risk. “In a more risk-averse environment, we might expect traders to pare back risk and square positions,” he said. “Instead, they are quite willing to add to long positions, implying that they are unwilling to risk missing a peace-dividend rally.”
Since the ceasefire was agreed upon in April, the US and Iran have been in a stalemate, with traders assessing the economic consequences of the ongoing conflict. US consumer sentiment fell to a record low in May, and long-term inflation expectations worsened significantly due to the war.
Waller indicated a patient approach to holding rates until the war’s economic impact is clearer, while also warning that a future rate hike could not be ruled out if inflation does not show signs of slowing.
“His latest remarks confirm the hawkish shift at the Fed,” stated Krishna Guha of Evercore. “At the same time, Waller’s policy stance was not as hawkish as his tone implied, as he expressed readiness to wait and see for now.”
In other developments, President Donald Trump emphasized his desire for Kevin Warsh to independently lead the Federal Reserve, seeking to mitigate concerns over potential pressure on the new central bank chief regarding policy decisions. Warsh was sworn into office on Friday.
Key market movements included:
Stocks
- The S&P 500 increased by 0.6% as of 3 p.m. New York time.
- The Nasdaq 100 rose by 0.8%.
- The Dow Jones Industrial Average gained 0.8%.
- The MSCI World Index was up 0.7%.
Currencies
- The Bloomberg Dollar Spot Index remained largely unchanged.
- The euro was stable at $1.1612.
- The British pound edged up 0.1% to $1.3448.
- The Japanese yen was unchanged at 159.13 per dollar.
Cryptocurrencies
- Bitcoin declined by 1.6% to $76,431.09.
- Ether fell by 1.8% to $2,097.25.
Bonds
- The yield on 10-year Treasuries decreased by one basis point to 4.56%.
- Germany’s 10-year yield dropped six basis points to 3.04%.
- Britain’s 10-year yield fell seven basis points to 4.90%.
- The yield on 2-year Treasuries increased four basis points to 4.12%.
Commodities
- West Texas Intermediate crude dropped 0.2% to $96.16 per barrel.
- Spot gold declined by 0.6% to $4,514.20 per ounce.
Further updates are available on bloomberg.com.
Published on May 23, 2026.
