US stocks edged higher on Friday, supported by renewed optimism around potential diplomatic progress between Washington and Tehran, alongside strong momentum in semiconductor stocks led by Intel.
The S&P 500 rose about 0.25%, while the Nasdaq 100 climbed 1.2%. The Dow Jones Industrial Average, however, was down 179 points.
The cautious optimism follows reports that Iranian Foreign Minister Abbas Araqchi is expected to arrive in Islamabad, raising the possibility of fresh US-Iran negotiations.
Hopes for diplomacy lift sentiment
A Pakistani government source in a Reuters report indicated that Araqchi would arrive with a small delegation, with peace talks between the US and Iran likely to take place.
The development offered a reprieve after a week dominated by escalating tensions, including a naval standoff in the Strait of Hormuz, where both sides have seized commercial vessels.
The geopolitical situation has remained fluid. President Donald Trump said on Thursday that Israel and Lebanon had agreed to extend their ceasefire by three weeks following discussions at the White House.
“The Meeting went very well!” the president wrote in a Truth Social post. “The United States is going to work with Lebanon in order to help it protect itself from Hezbollah,” he added.
Trump also stated that he had ordered the US Navy to “shoot and kill any boat” that is laying mines in the strait, underscoring the risks still facing global shipping routes.
Oil prices, a key barometer of the conflict’s economic impact, remain elevated.
Brent crude futures are still about 44% above pre-war levels, while US West Texas Intermediate traded above $95 per barrel. However, prices eased slightly on hopes that negotiations could reduce supply disruptions.
Earnings and semiconductors provide support
Beyond geopolitics, corporate earnings played a significant role in supporting market sentiment.
Intel shares surged more than 26% after the chipmaker forecast second-quarter revenue above Wall Street expectations. Rival AMD also gained nearly 12%, extending a broader rally in semiconductor stocks.
Microsoft and Marvell Technology also traded higher, suggesting that US tech stocks previously pressured by developments in artificial intelligence are stabilizing.
Still, the broader earnings picture remains uncertain.
While several companies have reported strong results, those figures only reflect a limited period of disruption from the ongoing conflict, leaving investors cautious about forward guidance.
Markets remain cautious despite resilience
Despite recent record highs in the S&P 500 and Nasdaq Composite, major indices are on track to end the week slightly lower.
The S&P 500 and Dow are each down about 0.3% for the week, while the Nasdaq has slipped around 0.1%.
Market participants continue to grapple with elevated uncertainty, particularly around energy prices and geopolitical risks.
Investors are also looking ahead to the Federal Reserve’s upcoming policy meeting next week.
According to LSEG data, traders see a 99.5% probability that interest rates will remain unchanged, with focus shifting to how policymakers assess the impact of elevated energy prices on the economic outlook.
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