U.S. equity futures are pointing to a stronger open on Friday, suggesting markets may continue the rally built over recent sessions.
Investor confidence remains supported by hopes that the U.S. conflict with Iran could be nearing a resolution, following fresh comments from President Donald Trump.
Speaking in Las Vegas on Thursday, Trump said the “war in Iran is going along swimmingly” and “should be ending pretty soon.”
Although similar remarks have been made throughout the conflict, they continue to help sustain a constructive tone across financial markets.
“If a resolution can be found in the near term, then perhaps the market will have been right to see this as a blip rather than something which justifies a more significant derating of corporate valuations,” said Russ Mould.
He added, “Only time will tell, though sooner rather than later there will need to be evidence of Donald Trump’s repeated claims that the war will be ending soon coming to fruition.”
Markets are also drawing support from expectations of solid earnings, with a busy calendar of quarterly results from major corporations due next week.
Companies scheduled to report include 3M (NYSE:MMM), UnitedHealth (NYSE:UNH), AT&T (NYSE:T), Boeing (NYSE:BA), IBM Corp. (NYSE:IBM), Tesla (NASDAQ:TSLA), American Express (NYSE:AXP) and Intel (NASDAQ:INTC).
However, Netflix (NASDAQ:NFLX) is weighing on sentiment, with shares down 8.9% in premarket trading after issuing weaker-than-expected guidance for the second quarter despite beating first-quarter estimates.
On Thursday, stocks traded in a narrow range but ended the session higher overall, extending recent gains. Both the Nasdaq and S&P 500 reached new record closing highs.
By the close, the Nasdaq had risen 86.69 points, or 0.4%, to 24,102.70, the S&P 500 gained 18.33 points, or 0.3%, to 7,041.28, and the Dow Jones Industrial Average added 115.00 points, or 0.2%, to 48,578.72.
The recent rally has enabled the Nasdaq and S&P 500 to fully recover losses incurred in the weeks following the outbreak of the U.S.-Iran conflict.
Investors are also encouraged by the prospect of renewed negotiations between Washington and Tehran, although no official talks have been confirmed.
Reports suggest both sides may consider extending the current ceasefire by an additional two weeks to facilitate discussions.
Further boosting sentiment, Trump said on Truth Social that Israel and Lebanon have agreed to a 10-day ceasefire.
He also indicated that Israeli Prime Minister Benjamin Netanyahu and Lebanese President Joseph Aoun have been invited to the White House for peace talks.
Iran has continued to demand that Israel halt its attacks on Hezbollah in Lebanon as part of any ongoing ceasefire.
“It’s like the events of the past month-and-a-half have been placed in the rearview mirror by investors,” said Dan Coatsworth. “The market’s sanguine perspective may be tested if the rhetoric about an end to the fighting isn’t matched by reality sooner rather than later.”
On the economic front, the Federal Reserve reported an unexpected decline in U.S. industrial production for March.
Output fell 0.5% during the month, following a 0.7% increase in February, while economists had expected a modest 0.1% rise. The decline was partly driven by sharp drops in utilities and mining output.
Sector-wise, transportation stocks stood out, pushing the Dow Jones Transportation Average up 4.1% to a record closing level.
J.B. Hunt (NASDAQ:JBHT) led the gains, rising 6.3% after delivering better-than-expected quarterly results.
Telecom stocks also performed strongly, with the NYSE Arca North American Telecom Index climbing 3.8%.
Gains were also seen in networking, hardware, software and energy stocks, while airline shares moved notably lower.
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