Wall Street capped a volatile week on a high note Friday, with the S&P 500 and Nasdaq 100 both closing at record highs. A powerful rally in chipmaker and AI-infrastructure stocks, combined with stronger-than-expected April jobs data, pushed the broader market higher despite escalating tensions in the Middle East and a record-low consumer sentiment reading.
The S&P 500 Index gained 0.84%, the Dow Jones Industrial Average edged up 0.02%, and the Nasdaq 100 surged 2.35%. June E-mini S&P futures rose 0.79%, while Nasdaq futures climbed 2.37%.
Also read: CareTrust REIT Reports Record Q1 Investment Activity, Raises Full-Year Guidance
Labor Market Resilience Supports Risk Appetite
The U.S. economy added 115,000 nonfarm payrolls in April, well above the 65,000 consensus estimate. March payrolls were also revised upward to 185,000 from the previously reported 178,000. The unemployment rate held steady at 4.3%, in line with expectations.
Average hourly earnings rose 0.2% month-over-month and 3.6% year-over-year, both below forecasts, suggesting wage pressures are moderating — a development that bond markets interpreted as supportive for fixed-income assets.
“The labor market remains a pillar of strength for the U.S. economy,” said market analysts tracking the data. “April’s report shows steady hiring without the overheating that would force the Federal Reserve to reconsider its current pause.”
Consumer Sentiment Hits Record Low, Inflation Expectations Ease
The University of Michigan’s May consumer sentiment index fell to 48.2, the lowest level since the survey began in 1978 and below the 49.5 forecast. However, inflation expectations offered a counterintuitive silver lining: one-year expectations eased to 4.5% from 4.7% in April, and the 5-to-10-year outlook dipped to 3.4%.
These figures helped Treasury notes rally, with the 10-year yield falling 2.1 basis points to 4.365%. The bond market also drew safe-haven bids amid fresh geopolitical turmoil.
Geopolitical Flashpoint: Strait of Hormuz Disruption Deepens
Iran seized an oil tanker in the Strait of Hormuz on Friday, according to the semi-official Tasnim news agency, citing “attempts to disrupt oil exports and the interests of the Iranian nation.” In response, U.S. forces struck missile and drone launch sites in Iran that had been used to attack three U.S. Navy destroyers transiting the strait.
The waterway, through which roughly one-fifth of the world’s oil and liquefied natural gas flows, remains effectively closed. Goldman Sachs estimates the disruption has drawn down nearly 500 million barrels from global crude stockpiles, with the drawdown potentially reaching 1 billion barrels by June.
President Trump has threatened “intense strikes” if Iran refuses a proposed deal to reopen the strait. WTI crude oil prices rose on the news, with reports that the U.S. is preparing to restart military operations as soon as next week to guide commercial ships through the strait.
What This Means for Markets and Investors
The simultaneous rally in stocks and bonds on Friday illustrates a market caught between two competing narratives: a fundamentally strong U.S. economy supported by solid earnings and employment, and an escalating geopolitical crisis that threatens global energy supplies.
Earnings season remains a bright spot. Of the 446 S&P 500 companies that have reported first-quarter results, 83% have beaten estimates. Aggregate Q1 earnings are projected to rise 12% year-over-year, according to Bloomberg Intelligence. Excluding the technology sector, however, earnings growth slows to roughly 3% — the weakest in two years.
The Federal Reserve is not expected to cut rates at its June 16–17 meeting, with markets pricing only a 6% chance of a 25-basis-point reduction. Across the Atlantic, the European Central Bank faces a different calculus: swaps imply a 79% probability of a 25-basis-point hike at its June 11 meeting, as ECB officials warn that the energy price shock from the Iran crisis could force tighter policy.
Key Movers: Chipmakers Lead, Software Stocks Lag
Semiconductor and AI-infrastructure stocks dominated the winners’ list on Friday. Sandisk surged more than 15%, Micron Technology gained over 14%, Intel rose more than 13%, and Advanced Micro Devices climbed over 10%. Qualcomm, Applied Materials, KLA Corp, and Marvell Technology each rose at least 5%.
Mining stocks also rallied as gold, silver, and copper prices advanced. Anglogold Ashanti gained over 7%, while Southern Copper and Barrick Mining each rose more than 3%.
On the downside, software stocks weighed on the Dow. Salesforce, Autodesk, Workday, ServiceNow, and Intuit each fell more than 2%. Adobe and Microsoft declined over 1%.
In individual movers, Akamai Technologies jumped more than 26% after raising its full-year revenue forecast and announcing a $1.8 billion AI cloud infrastructure deal. Monster Beverage gained over 13% on better-than-expected Q1 sales. Cloudflare fell more than 23% after issuing a weaker-than-forecast Q2 revenue outlook.
Conclusion
Friday’s session underscored the resilience of U.S. equities in the face of dual headwinds: a deteriorating geopolitical space in the Middle East and weakening consumer confidence. Solid corporate earnings and a still-healthy labor market provided the ballast investors needed to push indexes to new highs. The coming weeks will test whether that optimism can hold, particularly if the Strait of Hormuz disruption deepens and energy costs begin to feed through to broader inflation measures.
FAQs
Q1: Why did stocks hit record highs despite the Iran conflict?
Investors focused on strong corporate earnings — 83% of S&P 500 companies reporting Q1 results have beaten estimates — and a better-than-expected April jobs report. Chipmaker and AI stocks led the rally, offsetting geopolitical concerns.
Q2: What does the April jobs report tell us about the economy?
Nonfarm payrolls rose by 115,000, well above the 65,000 consensus. The unemployment rate held at 4.3%, and wage growth moderated. The data suggests the labor market remains resilient without adding to inflationary pressures.
Q3: How is the Strait of Hormuz disruption affecting markets?
The strait remains effectively closed, disrupting about one-fifth of global oil and LNG flows. Goldman Sachs estimates nearly 500 million barrels have been drawn from global stockpiles. Oil prices rose Friday, and the situation is being closely watched for further escalation.
