US stocks opened higher on Friday, extending their record-setting rally as robust corporate earnings and growing optimism surrounding artificial intelligence overshadowed lingering concerns about inflation and the economic repercussions of the ongoing conflict involving Iran.
Market Performance
The S&P 500 rose 0.4 per cent in morning trading, building on six consecutive gains and positioning the benchmark index for a ninth straight weekly advance. This would mark its longest winning streak since 2023, according to the Associated Press. The Dow Jones Industrial Average climbed 182 points, or 0.4 per cent, while the Nasdaq Composite advanced 0.6 per cent.
Technology Stocks Lead
Technology stocks spearheaded the gains, with Dell Technologies surging 33 per cent after reporting profits that exceeded market expectations and raising its outlook, driven by strong demand for AI computing solutions. The rally has pushed major US indices closer to fresh records and set them on track to end May with solid gains, despite ongoing worries over the US-Iran conflict and its potential impact on inflation.
Global Markets and Oil Prices
Markets in Europe and Asia also traded mostly higher on Friday. Investor sentiment received a boost from reports that the United States and Iran are working towards an agreement to extend the current ceasefire arrangement, which helped ease pressure on energy markets. Brent crude, the global benchmark, fell 1.8 per cent to $92.10 a barrel, though it remained significantly above the roughly $70-a-barrel level seen before the conflict began in late February. US benchmark crude declined 1.5 per cent to $87.55 a barrel.
Treasury Yields and Inflation Concerns
Treasury yields were largely unchanged as lower oil prices helped alleviate some inflation concerns. The yield on the benchmark 10-year US Treasury note stood at 4.45 per cent, unchanged from late Thursday. Higher oil prices remain a key concern for investors, as the conflict has disrupted oil shipments through the Strait of Hormuz, a critical route that handles roughly one-fifth of global oil and natural gas trade. The resulting rise in fuel and transportation costs has added to inflationary pressures and weighed on consumers and businesses.
Economic Data
Recent economic data has highlighted these concerns. A key inflation measure tracked by the US Federal Reserve accelerated in April to its highest level in three years, while consumer confidence has weakened amid rising prices and pressure on household budgets. Despite these headwinds, the stock market rally has persisted, fueled by strong corporate earnings and the transformative potential of artificial intelligence.
