The S&P 500 Index ($SPX) (SPY) on Friday closed up +1.20%, the Dow Jones Industrial Average ($DOWI) (DIA) closed up +1.79%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +1.29%. June E-mini S&P futures (ESM26) rose +1.20%, and June E-mini Nasdaq futures (NQM26) rose +1.28%.
Stock indexes settled sharply higher on Friday, with the S&P 500 and Nasdaq 100 posting new all-time highs and the Dow Jones Industrials posting a 7-week high. Stocks rallied on Friday amid mounting speculation that a deal to end the US-Iran war is near, sparking risk-on sentiment in asset markets. Crude prices sank more than -11% after Iran announced that the Strait of Hormuz is now "completely open" for commercial shipping, a major step toward ending the war with the US and Israel. The plunge in crude oil prices eased inflation concerns and knocked the 10-year T-note yield down -7 bp to 4.24%. Also, optimism about artificial intelligence and robust earnings have added to stock market momentum.
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Stocks also found support on Friday after Axios reported that the US and Iran are negotiating over a plan to end the war, with one element under discussion being that the US would release $20 billion in frozen Iranian assets in return for Iran giving up its stockpile of enriched uranium. Talks between the US and Iran are expected to continue in Pakistan on Sunday or Monday.
President Trump on Thursday claimed that Iran made key concessions in an ongoing negotiation to end the seven-week war. Mr. Trump said, “They’ve agreed to almost everything, and they've got to get to the table with a pen.” Mr. Trump said he ‘’might” travel to Pakistan if a deal with Iran is clinched. The prospects for a formal peace agreement also solidified when Israel and Lebanon agreed to a 10-day ceasefire on Thursday, and the truce appears to be holding today.
WTI crude oil prices (CLK26) fell more than -11% on Friday to a 5-week low after Iran said the Strait of Hormuz is open to commercial shipping, which could pave the way for a deal to end the war. President Trump said the US naval blockade in the strait "will remain in full force" until a deal is fully agreed. On Monday, the US vowed to blockade all vessels passing through the strait that call at Iranian ports or are headed there. The blockade could exacerbate global oil and fuel shortages, as about a fifth of the world’s oil and liquefied natural gas transits through the strait. Iran has been able to export crude oil during the war, exporting about 1.7 million bpd in March.
Comments on Friday from San Francisco Fed President Mary Daly signal that she favors keeping Fed policy steady, noting that the oil shock in the US is stronger on the inflation side than on growth, and that leaving policy unchanged would still restrain inflation.
Earnings season started strong this week, with 81% of the 48 S&P 500 companies that reported Q1 earnings beating estimates. Q1 S&P 500 earnings projected to climb +12% y/y, according to Bloomberg Intelligence. Stripping out the technology sector, Q1 earnings are projected to increase around +3%, the weakest in two years.
The markets are discounting a 1% chance for a +25 bp FOMC rate hike at the April 28-29 policy meeting.
Overseas stock markets on Friday settled mixed. The Euro Stoxx 50 rallied to a 7-week high and closed up +2.10%. China's Shanghai Composite fell from a 4-week high and closed down -0.10%. Japan's Nikkei Stock 225 closed down -1.71%.
Interest Rates
June 10-year T-notes (ZNM6) on Friday closed up +16 ticks. The 10-year T-note yield fell -6.7 bp to 4.244%. June T-notes rallied to a 1-month high on Friday, and the 10-year T-note yield fell to a 1-month low of 4.224%. Friday’s -11% plunge in WTI crude oil prices to a 5-week low lowered inflation expectations and boosted T-note prices. The 10-year breakeven inflation rate fell to a 1-week low of 2.346% on Friday.
European government bond yields moved lower on Friday. The 10-year German bund yield fell to a 1-week low of 2.945% and finished down -7.2 bp to 2.960%. The 10-year UK gilt yield dropped to a 1-week low of 4.725% and finished down -8.5 bp to 4.762%.
ECB President Christine Lagarde said, "Risks to the price outlook are tilted to the upside, especially in the near term, while the medium-term implications will depend on the intensity and duration of the war."
ECB Governing Council member Madis Muller said the ECB needs to stay "vigilant" to potential inflation risks from the Iran war, but "we don't have much hard evidence of second-round effects, so it's difficult to argue that there's an obvious case to raise rates."
ECB Governing Council member Alexander Demarco said, "Given higher uncertainty at the moment, June is a better moment than April" to decide whether an ECB interest rate response to the Iran war is necessary.
Swaps are discounting a 9% chance of a +25 bp ECB rate hike at its next policy meeting on April 30.
US Stock Movers
Airline stocks and cruise line operators rallied sharply on Friday as WTI crude prices plunged by more than -11%, which reduces fuel costs and boosts company profits. Alaska Air Group (ALK) closed up more than +10%, and Royal Caribbean Cruises Ltd (RCL) closed up more than 7% to lead gainers in the S&P 500. Also, United Airlines Holdings (UAL) and Carnival (CCL) closed up more than +7%, and Norwegian Cruise Line Holdings (NCLH) closed up more than +5%. In addition, Southwest Airlines (LUV) and American Airlines Group (AAL) closed up more than +4%, and Delta Air Lines (DAL) closed up more than +2%.
The Magnificent Seven technology stocks moved higher on Friday, a supportive factor for the overall market. Tesla (TSLA) closed up more than +3%, and Apple (AAPL) closed up more than +2%. Also, Alphabet (GOOGL), Nvidia (NVDA), and Meta Platforms (META) closed up more than +1%. In addition, Microsoft (MSFT) closed up +0.60%, and Amazon.com (AMZN) closed up +0.34%.
Chipmakers and AI-infrastructure stocks moved higher on Friday to provide support to the broader market. Analog Devices (ADI) and Marvell Technology (MRVL) closed up more than +4%, and ASML Holding NV (ASML), Seagate Technology Holdings Plc (STX), and KLA Corp (KLAC) closed up more than +3%. Also, Western Digital (WDC), Microchip Technology (MCHP), ARM Holdings Plc (ARM), Lam Research (LRCX), and Texas Instruments (TXN) closed up more than +2%.
Cryptocurrency-exposed stocks moved higher on Friday as Bitcoin (^BTCUSD) rose more than +3% to a 2.5-month high. Strategy (MSTR) closed up more than +11% to lead gainers in the Nasdaq 100. Also, Riot Platforms (RIOT) closed up more than +7%, and Galaxy Digital Holdings (GLXY) closed up more than +6%. In addition, Coinbase Global (COIN) closed up more than +3%, and MARA Holdings (MARA) closed up more than +1%.
Energy stocks and service providers tumbled on Friday as WTI crude oil fell more than -11% to a 5-week low. Valero Energy (VLO) closed down more than -7%, and APA Corp (APA). Occidental Petroleum (OXY) and Marathon Petroleum (MPC) closed down more than -5%. Also, ConocoPhillips (COP) and Phillips 66 (PSX) closed down more than -4%, and Diamondback Energy (FANG), Devon Energy (DVN), and Exxon Mobil (XOM) closed down more than -3%. In addition, Halliburton (HAL) closed down more than -2%, and Chevron (CVX) closed down more than -2% to lead losers in the Dow Jones Industrials.
Onto Innovation (ONTO) closed up more than +8% after Stifel upgraded the stock to buy from hold with a price target of $350.
Ally Financial (ALLY) closed up more than +7% after reporting Q1 adjusted EPS of $1.11, better than the consensus of 93 cents.
Autoliv (ALV) closed up more than +6% after reporting Q1 sales of $2.75 billion, above the consensus of $2.61 billion.
Woodward Inc. (WWD) closed up more than +5% after RBC Capital Markets initiated coverage on the stock with a recommendation of outperform and a price target of $450.
Netflix (NFLX) closed down more than -9% to lead losers in the Nasdaq 100 after forecasting Q2 revenue of $12.57 billion, below the consensus of $12.64 billion.
Albemarle (ALB) closed down more than -8% after Baird downgraded the stock to neutral from outperform.
Alcoa (AA) closed down more than -7% after reporting Q1 sales of $3.19 billion, weaker than the consensus of $3.27 billion.
Earnings Reports(4/20/2026)
AGNC Investment Corp (AGNC), Alaska Air Group Inc (ALK), BOK Financial Corp (BOKF), Cleveland-Cliffs Inc (CLF), Steel Dynamics Inc (STLD), Wintrust Financial Corp (WTFC), Zions Bancorp NA (ZION).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.