Deutsche Bank’s Jim Reid notes that improved sentiment around a potential Iran deal helped the S&P 500 recover earlier losses and close slightly higher. The index is less than 1% below its record high and on track for an eighth straight weekly gain, led by defensive sectors and blue-chip names, while some tech and consumer names underperformed on earnings news.

Index nears record as risk mood improves

"The tentative optimism meant 10yr Treasuries (-1.4bps) and the S&P 500 (+0.17%) posted modest gains, with equity futures and Asian markets also moving higher this morning."

"For equities, improved optimism on Iran meant that US stocks erased initial declines, with the S&P 500 (+0.17%) advancing despite trading in the red for most of the session.This leaves the index just -0.74% below its all-time high and on track to post an eighth consecutive weekly gain, which would be the longest such run since 2023."

"Defensive sectors and blue-chip names led the advance, bringing the Dow Jones (+0.55%) to a new record high. Tech stocks were broadly stable, with the Nasdaq (+0.09%) and the Magnificent 7 (+0.03%) little changed, though Nvidia (-1.77%) fell after its results the previous evening."

"By contrast, IBM (+12.43%) surged on news that the US administration agreed to award the company $1bn to build a foundry for producing quantum computing chips. Meanwhile, Intuit (-20.02%) and Walmart (-7.27%) were two of the three biggest decliners in the S&P after soft earnings releases."

"A positive mood has mostly continued in Asian markets overnight with the Nikkei (+2.29%) leading the way. Most other main markets are up around half a percent. S&P (+0.26%) and Nasdaq (+0.38%) futures are also higher alongside European Stoxx (+0.82%) futures."

"This follows a less positive session in Europe yesterday, with several indices losing ground, including Germany’s DAX (-0.53%) and France’s CAC 40 (-0.39%). However, the STOXX 600 (+0.04%) eked out a fourth consecutive gain, supported by equity strength in other countries, including the UK and Switzerland."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)