(May 28): Wall Street traders left stocks wavering amid mixed signals about prospects for a deal to end the war in Iran and revive energy flows through the vital Strait of Hormuz.
While equities remained at record highs, the S&P 500 closed little changed. US oil settled below US$89. In late hours, Salesforce Inc gave a tepid outlook. Snowflake Inc raised its sales forecast and signed a US$6 billion multiyear agreement to use Amazon.com Inc’s cloud services and chips.
US President Donald Trump said he was “not satisfied” in negotiations with Iran, damping expectations for an imminent breakthrough. The US denied an Iranian media report about a draft interim deal that said traffic through the Strait of Hormuz could return to normal within a month of it coming into effect.
Trump asserted that no one nation would control the waterway, highlighting a key sticking point in resolving the nearly three-month conflict. He didn’t indicate what steps the US would take to ensure free passage of vessels. The president also downplayed the possibility of Iranian sanctions relief.
“The situation surrounding Iran remains highly fluid as negotiations continue towards a more durable peace agreement,” said Adam Turnquist at LPL Financial. “A meaningful reopening of the Strait of Hormuz will likely be necessary for oil prices to move sustainably lower.”
US Secretary of State Marco Rubio said that “we’ll see over the next few hours and days whether progress could be made” on Iran. US Special Envoy Steve Witkoff, Jared Kushner and Vice President JD Vance “have been very involved,” he noted.
See also: US stocks gain on optimism over US-Iran deal to open Hormuz
“The stock market has enough confidence that a resolution with Iran will eventually come to light, even if it’s not immediate,” said Alexander Guiliano at Resonate Wealth Partners. “While it may seem like stocks have moved too fast, we saw a garden variety correction only two months ago, which helped to reset sentiment.”
Veteran market strategist Ed Yardeni dismissed concerns that US stocks are in a bubble, arguing the recent rally was driven by solid corporate profits rather than speculation.
“The big difference is earnings,” Yardeni told Bloomberg Television’s Surveillance. He coined the term “FEMO” — fabulous earnings momentum — to distinguish the current rally from “FOMO,” or fear of missing out, which he said is based on hope and hype rather than fundamentals.
See also: US stock futures gain as crude oil drops on Iran
Earnings growth powered by the AI boom will drive further gains in stocks, Goldman Sachs Group Inc strategists led by Ben Snider said as they increased their year-end target for the S&P 500 to 8,000 points. The gauge closed at 7,520.36 on Wednesday.
Uploaded by Isabelle Francis
