Dow jumps 370 Points as AI optimism, Iran talks lift stocks

• Diplomatic talks between the US and Iran over uranium stockpiles and Strait of Hormuz control eased oil-driven inflation fears, with Treasury yields retreating (10-year at 4.54%, 30-year at 5.07%)
• AI optimism remained strong as UBS raised its 2026 S&P 500 target to 7,900 from 7,500, while semiconductor stocks continued supporting the market's eighth consecutive weekly gain
• Workday surged 7% on better-than-expected earnings, while Nvidia dipped modestly despite strong guidance, setting up potential buying opportunities in AI-related stocks

Market Summary: Dow Jumps 370 Points on AI Optimism and Iran Diplomacy

Key Market Movements

U.S. stocks rallied Friday ahead of Memorial Day weekend, with the Dow Jones Industrial Average climbing 373 points (+0.74%), while the S&P 500 and Nasdaq Composite each gained approximately 0.59%. The Dow reached a record high Thursday for the first time since February 10, completing the return of all three major indexes to all-time highs this month.

Primary Drivers

Geopolitical Developments: Investor sentiment improved on diplomatic progress between the U.S. and Iran regarding the three-month Middle East conflict. Negotiations focused on Iran's uranium stockpile and control of the Strait of Hormuz. Oil prices moderated from weekly peaks as traders anticipated potential stabilization of energy flows through the critical shipping route.

AI and Technology: Continued enthusiasm for artificial intelligence remained a key market support. UBS Global Wealth Management raised its year-end 2026 S&P 500 target to 7,900 from 7,500, citing strong consumer spending and robust data center demand. Semiconductor stocks, particularly Nvidia, continued supporting broader gains. The S&P 500 is tracking its eighth consecutive weekly gain—the longest streak since late 2023.

Bond Markets

Treasury yields eased after earlier volatility, with the 10-year yield falling to around 4.54% and the 30-year to approximately 5.07%. Earlier this week, the 30-year yield hit its highest level since before the global financial crisis.

Corporate Highlights

Workday surged 7% after beating quarterly revenue and profit expectations. Estée Lauder also moved on collapsed merger talks with Puig.

Outlook

Markets remain sensitive to geopolitical developments and inflation risks, with investors awaiting May consumer sentiment data before Monday's holiday closure.