Stocks climb, yields dip as investors focus on some progress in US-Iran talks
Market Overview and Key Developments
By Caroline Valetkevitch and Stefano Rebaudo
NEW YORK/MILAN, May 22 (Reuters) - Major stock indexes rose and Treasury yields eased on Friday as investors weighed the likelihood of a near-term deal to end the U.S.-Israeli war with Iran.
Oil prices gained, with uncertainty surrounding the Iran talks still a concern.
Progress in US-Iran Talks
U.S. Secretary of State Marco Rubio said the United States has seen some progress toward a deal with Iran, but more work is required. Iran's foreign ministry spokesperson said the two sides' differences were deep and significant.
Pakistan's military chief arrived in Tehran on Friday to press on with mediation efforts to end the conflict.
Stock Market Performance
On Wall Street, the Dow posted a record closing high, and the S&P 500 registered an eighth straight week of gains. Stocks have been driven higher by booming demand for AI-related stocks, even as concerns about economic fallout from the war remain. European shares finished at their highest level in more than a month and logged their biggest weekly gain in seven.
Correlation Between Bond Yields and Stock Prices
"You're starting to see a larger negative correlation between bond yields and stock prices," said Anthony Saglimbene, chief market strategist at Ameriprise. "Now that we're out of the earnings season, these macro conditions may be a bigger factor."
Treasury Yields and Economic Concerns
The yield on benchmark U.S. 10-year notes fell 2.6 basis points to 4.558%, from 4.584% late on Thursday. A selloff early in the week led yields to hit months- or years-long highs, with the 10-year yield on Tuesday reaching its highest level since January 2025.
Investors are worried that ongoing energy disruptions because of the conflict will filter through to core consumer prices, potentially forcing a tighter monetary policy response.
Major Indexes and Global Markets
The Dow Jones Industrial Average rose 294.04 points, or 0.58%, to 50,579.70, the S&P 500 gained 27.75 points, or 0.37%, to 7,473.47 and the Nasdaq Composite rose 50.87 points, or 0.19%, to 26,343.97.
MSCI's gauge of stocks across the globe rose 5.66 points, or 0.51%, to 1,112.55. The pan-European STOXX 600 index rose 0.73%, helped by technology stocks.
Turkey's Financial Markets
Turkey's financial markets rebounded after being rattled this week by political moves against the country's main opposition party. The benchmark BIST 100 index rose 4.9% in Istanbul, recovering from a 6% plunge on Thursday that had triggered a suspension of trading after a top court moved to effectively oust main opposition leader Ozgur Ozel.
Oil and Currency Markets
Oil Prices and Consumer Sentiment
OIL UP, U.S. CONSUMER SENTIMENT DOWN
Investors also digested a survey showing U.S. consumer sentiment plunged to a record low in May as surging gasoline prices fuelled anxiety over worsening affordability.
Oil prices finished higher. U.S. crude rose 25 cents to settle at $96.60 a barrel and Brent gained 96 cents to settle at $103.54.
Currency Movements and Central Bank Policy
The dollar held near six-week highs as traders monitored talks on the war and assessed whether the U.S. Federal Reserve would raise interest rates if inflation continued to accelerate.
Kevin Warsh was sworn in as Fed chair on Friday.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro,rose 0.04% to 99.24, with the euro down 0.06% at $1.1611.
Against the Japanese yen, the dollar strengthened 0.11% to 159.13.
Japan's Inflation and Gold Prices
Data on Friday showed Japan's core inflation slowed to a four-year low in April, complicating the outlook for Bank of Japan policy.
Spot gold fell 0.78% to $4,506.47 an ounce.
(Reporting by Caroline Valetkevitch in New York and Stefano Rebaudo in Milan; Editing by Kim Coghill, Thomas Derpinghaus, Sharon Singleton, Aurora Ellis, Rod Nickel)
