U.S. stock futures traded higher early Wednesday, pointing to another positive session for equities after strong gains in the previous trading day.
Investor confidence improved as hopes grew that the conflict in the Middle East could move toward a diplomatic resolution, following a favorable report from Axios.
Axios, citing two U.S. officials and two additional people familiar with the talks, reported that the White House believes it is nearing a short memorandum of understanding with Iran aimed at ending the war.
According to the report, the proposed arrangement would see Iran agree to suspend nuclear enrichment activities, while Washington would ease sanctions and release billions of dollars in frozen Iranian assets. The discussions also reportedly include easing restrictions tied to shipping through the Strait of Hormuz.
Although the report stressed that negotiations remain incomplete, sources told Axios the current talks represent the closest the two sides have come to an agreement since hostilities began.
Adding to the positive tone, President Donald Trump said the United States would temporarily halt efforts to escort commercial vessels through the Strait of Hormuz while discussions continue over a possible final agreement.
Still, Trump also struck a tougher tone in a separate Truth Social post, warning that the U.S. would resume attacks against Iran “at a much higher level and intensity than it was before” if negotiations collapse.
“Even without a fully detailed agreement, the mere progress toward a framework for de-escalation is enough to alter how risk is being priced,” said Daniela Hathorn, Senior Market Analyst at Capital.com.
“However, it is important to stress that this is still a fragile step rather than a definitive resolution,” she added. “A one-page memo suggests that many key details remain unresolved, and past experience has shown that negotiations can quickly stall or reverse.”
Technology stocks also supported futures trading, led by a strong premarket rally in AMD (NASDAQ:AMD), which jumped 15.3%.
AMD surged after delivering quarterly earnings and revenue ahead of analyst expectations while also issuing stronger-than-expected guidance for the second quarter.
In economic news, payroll processor ADP reported stronger-than-expected private sector hiring growth in April.
ADP said private payrolls increased by 109,000 jobs last month after March’s figure was revised lower to 61,000 from the previously reported 62,000.
Economists had forecast job growth of 85,000.
Markets had already rallied sharply on Tuesday following early weakness, with both the Nasdaq Composite and the S&P 500 erasing Monday’s declines and closing at fresh record highs.
Despite easing from intraday peaks late in the session, the major indexes still ended firmly higher. The Nasdaq gained 258.32 points, or 1%, to finish at 25,326.13, while the S&P 500 climbed 58.47 points, or 0.8%, to 7,259.22. The Dow Jones Industrial Average added 356.35 points, or 0.7%, to close at 49,298.25.
Equities also benefited from a steep decline in oil prices. U.S. crude futures fell more than 3% after surging over 4% on Monday.
Oil prices retreated as concerns about escalating Middle East tensions eased. Secretary of War Pete Hegseth said the U.S.-Iran ceasefire was “not over” despite Iranian attacks targeting the United Arab Emirates.
“Ultimately the President is going to make a decision whether anything were to escalate into a violation of a ceasefire,” Hegseth said. “Right now, the ceasefire certainly holds but we’re going to be watching very, very closely.”
Chairman of the Joint Chiefs of Staff Gen. Dan Caine told reporters the Iranian attacks remain “below the threshold of restarting major combat operations at this point.”
Hegseth also confirmed that two American commercial vessels, escorted by U.S. destroyers, safely passed through the Strait of Hormuz, declaring the “lane is clear.”
Corporate earnings remained another source of support for markets. U.S.-listed shares of Anheuser-Busch InBev (BUD) jumped 8.7% after the brewer reported quarterly results that beat analyst expectations on both earnings and revenue.
Separately, fresh data from the Institute for Supply Management showed a modest slowdown in growth across the U.S. services sector during April.
The ISM services PMI slipped to 53.6 from 54.0 in March, though it remained above the 50 level that signals expansion. Economists had expected a reading of 53.7.
Technology-related sectors led Tuesday’s market gains.
Computer hardware stocks rallied strongly, pushing the NYSE Arca Computer Hardware Index up 4.4% to a new record close.
Semiconductor stocks also advanced sharply, with the Philadelphia Semiconductor Index climbing 4.2% to another all-time closing high.
Intel (NASDAQ:INTC) helped lift the chip sector after Bloomberg reported that Apple (NASDAQ:AAPL) had explored using Intel to manufacture processors for its devices in the United States.
Airline, steel and housing stocks also posted notable gains as buying interest spread broadly across the market.
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