Wall Street Hits Records on Ceasefire, Inflation Data

Key Moments

Indexes Reach New Peaks Amid Ceasefire Headlines

NEW YORK, May 28 (Reuters) – U.S. equities ended higher, with the S&P 500 and Nasdaq closing at record levels after media reports indicated that the United States and Iran had worked out a draft arrangement to prolong their ceasefire by 60 days. Investors also assessed a fresh batch of inflation data that pointed to mounting price pressures.

The Dow Jones Industrial Average, which had lagged for much of the trading day, edged higher late in the session to notch another record closing high as well.

Sources told Reuters that the draft ceasefire extension still requires sign-off from U.S. President Donald Trump. Iran’s Tasnim news agency reported that the text of a potential memorandum of understanding with the United States had not yet been finalized or confirmed.

“Traders are on a hair trigger with the back-and-forth on deal news, and have been leaning long to avoid getting trampled by a better-than-expected outcome. The harder part is that the inflationary forces may not abate as fast as markets want,” said Jamie Cox, managing partner at Harris Financial Group.

Macro Data: Inflation Accelerates, Growth Revised Lower

Economic releases showed that U.S. inflation in April rose at its quickest pace in three years, propelled by higher energy costs linked to the Iran war.

Separately, U.S. gross domestic product for the first quarter was revised down to a 1.6% annualized increase, with expectations that growth momentum will ease in the current quarter.

Market Scorecard

All three major U.S. benchmarks advanced on the day:

Sector Moves: Healthcare and Tech Lead Gains

Healthcare shares within the S&P 500 advanced strongly. Eli Lilly climbed 4% after CVS Health said it would reinstate coverage for the company’s weight-loss injection, Zepbound, and add the newly approved obesity drug Foundayo to its offerings.

Technology stocks also contributed to the advance. Microsoft rose 3.5% after news outlet the Information reported that the company plans to introduce a new coding model next week.

Marvell Technology added 3% following an upgrade from UBS, which increased its price target on the stock to $230 from $195. The company’s shares have already more than doubled year-to-date.

Snowflake surged 36% after the data analytics company raised its full-year product revenue outlook and unveiled a five-year artificial intelligence infrastructure agreement valued at $6 billion with Amazon Web Services. Peers Datadog and MongoDB also registered gains.

AI Optimism and Earnings Strength Offset Geopolitical Risks

Renewed enthusiasm around AI themes and solid earnings momentum have been key supports for the recent rally, even as tensions in the Middle East have fed higher inflation expectations.

“Markets continue to look through these risks because the global economy and corporate earnings remain relatively resilient,” said Jitania Kandhari, deputy CIO, solutions and multi-assets, at Morgan Stanley Investment Management.

“Geopolitical instability could ultimately accelerate spending in areas tied to AI, including cybersecurity, defense technology, energy infrastructure and supply-chain resiliency, reinforcing the long-term investment case.”

Kandhari noted that although the S&P 500 is currently valued at roughly 21 to 22 times forward earnings, compared with a 10-year trailing average multiple of 19.7 times, investors are less worried about elevated valuations because earnings projections are rising faster than share prices.

Notable Stock Movers Beyond Tech

In retail, Dollar Tree jumped almost 18% after the discount chain raised its full-year profit guidance. Best Buy rallied 15.8% after the electronics retailer projected second-quarter sales above analyst expectations.

Drone-related names gained ground following a Wall Street Journal report that the Trump administration was in discussions to provide funding to drone companies. Shares of Unusual Machines advanced almost 11%.

Market Breadth and Trading Activity

Market breadth was positive on the New York Stock Exchange, where advancing issues outpaced decliners by a 1.74-to-1 ratio. There were 526 new highs and 99 new lows on the NYSE.

On the Nasdaq, 3,114 stocks rose while 1,728 declined, with advancers leading decliners by a 1.8-to-1 margin. The S&P 500 recorded 18 new 52-week highs and 10 new lows, while the Nasdaq Composite logged 127 new highs and 65 new lows.

Total volume on U.S. exchanges reached 19.2 billion shares, exceeding the 19.03 billion share average for a full session over the past 20 trading days.