U.S. stock markets surged Thursday, driven by strength in the technology sector, while crude oil prices tumbled after supertankers began moving through the Strait of Hormuz again — just hours after President Donald Trump signed a peace agreement with Iran.
With markets set to close Friday in honor of Juneteenth, Wall Street’s three major indexes still managed to post gains for the shortened trading week as investors weighed developments in the Middle East and a more hawkish tone from the Federal Reserve under its new leadership.
Here are the major stories shaping markets right now:
Three Saudi-flagged supertankers moved through the Strait of Hormuz shortly after the U.S.-Iran peace deal was finalized. Meanwhile, Ukrainian drones managed to bypass Russian air defenses and struck an oil refinery near Moscow for the second time in three days. Israel released a map outlining an expanded military control zone in Lebanon, raising questions about compliance with the terms of the U.S.-Iran agreement. The Bank of England voted 7-2 to keep borrowing costs unchanged as it continues watching inflation. U.S. weekly unemployment claims declined last week, though the broader trend points upward, hinting at a slowdown in job growth. And space startups are in talks with insurance companies about coverage for AI data centers in orbit.
Key Market Snapshot
U.S. stock indexes finished higher, with the Nasdaq jumping 1.9%, while Europe’s STOXX 600 edged lower. Semiconductor stocks led the way, while energy and aerospace and defense shares lagged behind. The U.S. dollar climbed to a one-year high on expectations of interest rate increases, and Japanese officials issued warnings about weakness in the yen. U.S. Treasury yields pulled back slightly, one day after the Federal Reserve’s new chairman made his debut. Both Brent and WTI crude oil prices fell to their lowest levels since before the Iran conflict began, and gold prices also declined.
Fed Under New Leadership Raises Uncertainty
Investors are preparing for a less predictable Federal Reserve now that Kevin Warsh is at the helm. Although the Fed left its benchmark interest rate unchanged Wednesday — a widely expected move — markets were caught off guard by new projections and comments from Warsh suggesting the central bank will stop telegraphing future rate decisions in advance. Warsh also announced he is launching a review of the Fed’s overall operations.
Central Banks Respond to Post-War Inflation
Central banks around the globe are increasingly unable to overlook the inflation surge tied to the Iran conflict, with many either raising interest rates or signaling they plan to. Analysts expect the process of bringing energy prices back to normal levels to stretch well into next year. The Bank of England joined the Fed in hinting at future rate hikes, while the European Central Bank and the Bank of Japan have already moved to raise rates.
Political Friction: Trump and Senate Republicans Clash
Tensions between President Trump and Senate Republicans are growing, with just months to go before midterm elections. After Senate Republicans refused to advance the SAVE America Act — legislation that would have imposed strict voter documentation rules and eliminated the filibuster — Trump retaliated by derailing a Senate effort to pass a key national security bill. The move was widely seen as an attempt to shield his controversial pick of loyalist Bill Pulte for the role of acting U.S. spy chief.
What Could Move Markets Tomorrow
Traders will be watching for further developments in the Middle East, shifts in energy markets, and social media posts from President Trump. On the data front, markets will also track Germany’s producer prices for May, UK retail sales for May, Canada’s retail sales for April, Poland’s industrial output for May, and Moody’s credit rating reviews for Canada and Slovakia.
