U.S. stocks rallied sharply Friday as investors responded to signs of de-escalation in Middle East tensions, easing fears of supply disruptions and triggering a broad risk-on move. The Dow Jones Industrial Average rose to 49,447.9, up 869.20 points (+1.79%), while the S&P 500 climbed to 7,126.04, gaining 84.76 points (+1.20%), and the Nasdaq Composite advanced to 24,468.5, up 365.78 points (+1.52%).
The primary catalyst was a dramatic shift in geopolitical sentiment after President Donald Trump said Iran had agreed to keep the Strait of Hormuz open, a critical artery for global oil shipments.
Although some uncertainty remains, particularly with conflicting messaging from Iranian officials, the market interpreted the development as a meaningful step toward stabilization.
That shift was most visible in energy markets. Crude oil plunged roughly 8.7% to $83.20, reflecting a rapid unwind of geopolitical risk premiums. At the same time, gold edged higher about 1.4% to $4,877, suggesting investors are not fully abandoning hedges. The CBOE Volatility Index (VIX) dipped to 17.76, down about 1%, signaling reduced near-term market anxiety reflecting the risk-on sentiment among investors.
With geopolitical pressure easing, investor focus is quickly rotating back to fundamentals, particularly the upcoming earnings season led by major technology companies. According to a new Wedbush research note, recent supply chain checks point to “overwhelming bullish” demand for AI infrastructure and cloud computing, with analysts expecting tech stocks to potentially rally another 15% into year-end as AI monetization accelerates .
Next week’s earnings from IBM, Tesla, and other large-cap names are expected to test that thesis. IBM, which reports midweek, is seen as a key bellwether for enterprise AI spending. Analysts expect a “solid quarter” driven by demand for hybrid cloud, automation, and cybersecurity, with AI-related workloads becoming a central growth driver . The Street is projecting roughly $15.6 billion in revenue and $1.81 in earnings per share, though some analysts believe those estimates could prove conservative.
More broadly, investors will be watching whether companies confirm continued enterprise spending on AI infrastructure and software, particularly amid lingering concerns about competition from next-generation AI platforms.
Looking ahead, markets are likely to remain sensitive to both the negotiations between Iran and the United States, and corporate earnings. While the easing of Middle East tensions provided a strong tailwind Friday, the durability of the rally may hinge on whether tech giants deliver on elevated expectations in the weeks ahead.
