Risk Rally Returns as Iran Deal Cools Inflation Fears

Markets rebounded sharply on Thursday as investors welcomed an interim US-Iran peace deal that reopened the Strait of Hormuz and eased concerns about another energy-driven inflation shock. That shift helped stocks recover from the prior session’s Fed-related selloff, while longer-dated Treasury yields moved lower as traders reassessed the odds of additional rate hikes. The tone was broadly risk-on, led by technology and especially semiconductors, even as some pockets of the market remained volatile.

Key Headlines & Market Movers:

• US-Iran agreement eases inflation pressure: The main macro driver was the announced de-escalation between the US and Iran, which reduced fears of a prolonged disruption in global energy flows. With shipping beginning to return through the Strait of Hormuz, investors saw less risk of another spike in oil prices feeding through to headline inflation. That helped support both equities and bonds, as lower expected energy pressure can make it easier for central banks to stay patient.

Semiconductor stocks power the market higher: Chipmakers led the advance, with the sector rallying to fresh highs after President Trump said Intel would work with Apple to design and manufacture semiconductors in the US. Even without formal company confirmation in the text provided, the market clearly treated the statement as a meaningful positive for domestic chip production and AI-related spending. The move reinforced how concentrated leadership remains in large-cap tech and semiconductor names.

Fed tension remains, but lower yields steady sentiment: The rebound came just one day after markets sold off on concerns that the Federal Reserve may still need to tighten policy further if inflation stays sticky. Thursday’s decline in the 10-year Treasury yield suggested some of that concern faded as energy risks moderated, though the policy backdrop is still not fully settled. Corporate news also added to the day’s trading, with SpaceX shares continuing to slide after its IPO volatility while Accenture warned on revenue, highlighting that not all growth stories are being rewarded equally.

S&P 500 Sector Performance

Looking Ahead

The next key question is whether the Iran ceasefire holds and whether calmer oil markets persist long enough to influence incoming inflation data and reshape rate expectations. If energy prices remain contained, that could reduce pressure on the Fed and help preserve the current equity rebound, particularly in rate-sensitive growth sectors. Investors will also be watching whether semiconductor leadership broadens into a more durable market advance or remains a narrow theme in an otherwise selective tape.