US equities surged on May 6 as traders priced in the possibility of a breakthrough between Washington and Tehran. The S&P 500 rose 1.46% to close at 7,365.12, while the Nasdaq Composite gained 2.02% to finish at 25,838.94. The Dow Jones Industrial Average added 612.34 points, or 1.24%, ending the session at 49,910.59. The S&P 500 and Nasdaq both set record closes.
Markets reacted before any formal agreement was announced
Axios, citing sources, reported that the United States and Iran were getting close to an agreement aimed at resolving the conflict. The report said the arrangement would include a moratorium on nuclear enrichment. An Iranian foreign ministry spokesperson also told CNBC that Iran was reviewing a US proposal tied to a resolution. That was enough for markets. Investors moved on expectation rather than confirmation.
The report linked the advance to two forces: growing optimism about easing tensions in the Middle East and a solid first-quarter earnings season. Since the Iran war began in February 2026, geopolitical headlines have shaped market direction in a blunt way. Escalation has pushed stocks lower. Signals of de-escalation have sent them sharply higher.
Oil, gasoline and Hormuz remain central to the risk picture
The earlier shock was severe. According to the report, oil prices jumped 42% to 44%, average US gasoline prices reached $4.30, and the Strait of Hormuz — a route that carries about one-fifth of global oil flows — was closed. Each sign of relief has helped equities recover. A breakdown in talks, or another closure of Hormuz, could reverse that move just as quickly.
Trump added caution later on Wednesday. He said it was only “perhaps, a big assumption” that Iran would accept US terms. That comment exposed the core weakness in the rally: the move to record highs was built on a deal that had not yet been secured.
Economic data offered support, but valuations and geopolitics still matter
The article also pointed to underlying economic strength. US consumer spending was up 5.3% year over year through February, while incomes rose 3.7%. Economists still expected about 2.2% real economic growth in 2026. Through April 17, tax refunds were running roughly $40 billion above the level seen in 2025.
Market breadth was another supportive signal. Smaller-company stocks had climbed more than 60% from their lows last April, suggesting the rally had expanded beyond a narrow group of large-cap names. Terry Sandven, chief equity strategist at U.S. Bank Asset Management Group, said equities were still trending higher overall, though he added that sustained earnings growth remained essential to justify current valuations.
Jay Hatfield, founder and CEO of Infrastructure Capital Advisors, said he did not expect the war to be resolved quickly and did not think Iran would easily give up its nuclear capabilities. Even so, he said he sees the S&P 500 reaching 8,000 by year-end. The report also cited Goldman Sachs, which estimates global AI infrastructure spending could top $2 trillion over the next decade. For now, the immediate focus stays on three items: Iran’s official response to the US proposal, oil prices, and the Federal Reserve’s rate stance.