Summary: U.S. equity benchmarks hit fresh highs after a Pakistani official said Iran's foreign minister was expected in Islamabad for potential follow-up nuclear talks with the United States. The S&P 500 and the Nasdaq rallied, while the Dow fell slightly. Markets now face a packed corporate earnings calendar featuring several megacap technology companies, an imminent Federal Reserve policy meeting, key macro releases and persistent energy-market risk tied to shipments through the Strait of Hormuz.
U.S. stock indexes moved higher on Friday as the market reacted to reports that Iranian Foreign Minister Abbas Araghchi could be traveling to Islamabad to participate in discussions that might set the stage for a second round of negotiations with the United States. The S&P 500 climbed 0.8% to 7,165.08 and the Nasdaq Composite rose 1.63% to close at 24,836.60, with both indexes reaching new intraday peaks. The Dow Jones Industrial Average bucked the advance, slipping 79.61 points, or 0.16%, to 49,230.71.
Energy markets were particularly sensitive to the diplomatic signals. Oil eased initially on the prospect of talks but regained ground on Monday as negotiations stalled. U.S. President Donald Trump said over the weekend that Iran could use a telephone to initiate discussions if it wanted to negotiate an end to the two-month conflict. Brent futures were trading about 1% higher at $106.42 on the session.
Movements in oil prices were reinforced by continued constraints on shipments. Iranian Foreign Minister Araghchi was reported to have been traveling between mediators in Pakistan and Oman before heading on to Russia, and shipments through the Strait of Hormuz remained limited, keeping global crude supplies tight and bolstering crude prices.
The equity market rally faces a substantive test this week from a dense schedule of corporate results and a Federal Reserve policy decision. The Fed is widely expected to keep policy rates on hold at its upcoming meeting, but investors will be seeking updated commentary from policymakers on how the ongoing regional conflict is affecting the economy and the likely path for interest rates.
Market pricing has shifted in response to energy-price developments. Concerns about energy-driven inflation have reduced the chance of a full 25-basis-point cut by December to less than one, compared with a market-implied expectation of at least two cuts before the conflict began in late February. The coming Fed meeting will also be Jerome Powell’s last as Fed chair; his term is set to expire on May 15. President Trump’s nominee to succeed him, former Fed Governor Kevin Warsh, appeared this week before a Senate panel as part of his confirmation process.
Alongside the policy meeting, important macro releases are due that could offer early signals about the conflict’s economic impact. First-quarter GDP figures and the March Personal Consumption Expenditures price index - the Fed’s preferred inflation gauge - will be released this week and could inform how policymakers and markets assess the inflation outlook amid elevated energy prices.
Corporate calendar tightens as mega-cap tech reports
Earnings season will put additional pressure on the market narrative. More than a third of S&P 500 companies are set to report this week, and five of the so-called Magnificent Seven megacap technology companies are among them. Microsoft, Alphabet, Amazon and Meta Platforms are scheduled to disclose results on Wednesday, while Apple is due to report on Thursday. Investor attention will be focused in particular on these companies’ capital spending plans for artificial intelligence infrastructure.
Outside of the tech cohort, other significant reporters this week include ExxonMobil, Eli Lilly, Qualcomm and ConocoPhillips. Their results will add sector-specific data points to the broader market picture, particularly in energy and health care.
Analysts weigh in
Citi: "It is no surprise that valuations and implicit growth expectations are high after the beta rally. We continue to argue that this puts more pressure on longer-term fundamental expectations to deliver, rather than a signal to sell. So much value derived from future growth means we continue to be in an environment where confidence in EPS trajectories is potentially more important than near-term operating results alone. Valuation dispersion work suggests this narrative applies to a large cohort of index names rather than concentrated in a few megacaps."
Evercore ISI: "The range of oil prices today drive ‘fat tail’ outcomes for stocks in 2026. A WTI spike to new highs above $120/bbl. or a prolonged period beyond July 4 of above $90 WTI/$4 per gallon gas prices will likely drive a retest of the 3/30 lows at 6,315 while a larger pullback to decade long support at 5,500 cannot be ruled out. WTI falling sustainably below the post-spike trough of $76.73 opens the potential for 1982 style gains to SPX 9,000 and beyond. Our base case remains oil prices moderate to the mid-$80’s WTI/below $4gal. gas before July 4th - tolerable for stocks and the economy."
JPMorgan: "One should use market weakness to buy into, as military, political and economic constraints all argued against a prolonged confrontation. We stay positive on stocks despite MXWO making a V-shaped rebound, and advise continuing to use dips driven by adverse geopolitical headlines to add."
RBC Capital Markets: "The story that our models tell is that the S&P 500 can stay on a path headed to 7,750 over the course of the next year, supported by a recovery in investor sentiment from deeply bearish levels and a solid earnings growth and economic backdrop that don’t incur too much damage (as a whole) from recent disruption to energy markets and the Middle East."
Market context and what to watch
- Equity benchmarks have moved to new intraday records, but the advance is facing tests from policy, earnings and energy-price volatility.
- Energy-market dynamics - including restricted shipments through the Strait of Hormuz and the status of talks involving Iran - remain a principal driver of near-term risk.
- The Fed meeting, first-quarter GDP and the March PCE report will be closely watched for signs of the inflation and growth trajectory amid higher energy prices.
Investors will be parsing corporate reports for signals on capital expenditure plans and demand conditions, particularly among the major technology platforms whose investment in artificial intelligence infrastructure is a focal point for forward-looking expectations. The week’s results and policy commentary are likely to shape whether recent gains extend or are retraced.