US stocks closed slightly higher on Thursday after a volatile trading session as investors weighed shifting developments surrounding the US-Iran conflict, fluctuating oil prices, and renewed concerns about inflation and global energy supply disruptions.
The Dow Jones Industrial Average rose 278 points, or 0.56%, to close near 50,288.
The S&P 500 gained 0.16%, while the Nasdaq Composite added 0.09% as markets recovered from earlier losses during the session.
Investor sentiment remained highly sensitive to headlines related to ongoing diplomatic negotiations between Washington and Tehran, with markets swinging throughout the day as oil prices and Treasury yields fluctuated.
Markets recover after early volatility
Stocks spent much of the morning under pressure before rebounding in afternoon trading as hopes for a diplomatic resolution in the Middle East improved sentiment.
West Texas Intermediate crude oil futures initially surged following a Reuters report stating that Iran’s Supreme Leader Ayatollah Mojtaba Khamenei had directed that enriched uranium remain inside the country, complicating prospects for a broader agreement with the United States.
Oil later reversed course, however, with WTI crude settling nearly 2% lower at $96.35 per barrel, while Brent crude fell more than 2% to close at $102.58.
The earlier spike in oil prices also pushed Treasury yields higher as investors worried that prolonged elevated energy costs could increase inflation pressures.
By the close, the benchmark 10-year Treasury yield was up slightly at 4.582%, while the 30-year Treasury yield edged lower to 5.107%.
Investor focus remained firmly on whether diplomatic talks could eventually reduce tensions and stabilize oil flows through the Strait of Hormuz, a critical route for global energy shipments.
Investors monitor Iran negotiations
Investors closely tracked comments from both US and Iranian officials throughout the session as conflicting reports continued to emerge around negotiations and Iran’s uranium stockpile.
US Secretary of State Marco Rubio said there had been “some good signs” in negotiations with Iran, though he also warned that a diplomatic resolution would become difficult if Tehran implemented a tolling system in the Strait of Hormuz.
President Donald Trump said the United States wanted the waterway to remain open and free of tolls as negotiations continued.
Meanwhile, the Iranian Students’ News Agency reported that Tehran was reviewing a US proposal that “has narrowed the gaps to some extent.”
The reports also stated that the draft agreement could include an immediate ceasefire, commitments to avoid targeting infrastructure, and guarantees for freedom of navigation through the Persian Gulf and the Strait of Hormuz under a joint monitoring mechanism.
Nvidia slips despite strong earnings
Investors also digested another round of corporate earnings reports, with Nvidia remaining in focus after posting results that exceeded Wall Street expectations.
The AI chipmaker reported stronger-than-expected earnings and guidance while also announcing an increase in its quarterly cash dividend to 25 cents per share.
Despite the strong results, Nvidia shares fell about 1% as some investors took profits after the stock’s massive rally over the past year.
Elsewhere, Walmart shares declined after the retailer issued weaker-than-expected second-quarter profit guidance while warning that elevated fuel prices were pressuring consumers.
Among sector movers, consumer staples led declines within the S&P 500, weighed down by weakness in Walmart and other retail stocks.
Quantum computing-related stocks, including IBM, D-Wave Quantum, Rigetti Computing, and GlobalFoundries also moved higher after reports that the Trump administration planned to support several quantum technology companies through new investments and partnerships.
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