The Dow Jones Industrial Average surged more than 300 points on Friday as oil prices tumbled following reports that Pakistan may mediate renewed talks between the United States and Iran. The S&P 500 also advanced, while the NASDAQ remained under pressure due to declines in semiconductor stocks.
Oil Retreat Fuels Market Optimism
The Dow gained approximately 0.7%, buoyed by a roughly 3% rise in Apple shares. The S&P 500 added around 0.6%, while the NASDAQ struggled to hold gains as chip stocks slid. Brent crude fell more than 4% to trade near $95 per barrel after surpassing $100 earlier in the week. West Texas Intermediate also dropped about 4% to above $88. Lower oil prices alleviated concerns over inflation, transportation costs, and corporate expenses.
Pakistan Explores Peace Talks Mediation
According to Reuters, Pakistan is exploring a path to restart stalled negotiations between the U.S. and Iran. Three Pakistani sources indicated that China initiated the diplomatic effort. Pakistani officials discussed the plan with Iranian representatives during recent meetings. However, the sources noted that “obstacles to any talks with the US remain high.” China has significant trade and energy interests in the Gulf, and Pakistan maintains close ties with Beijing, Saudi Arabia, and Iran, complicating its potential mediator role.
Geopolitical Risks Drive Oil Volatility
Oil had climbed above $100 earlier amid ongoing conflict in the region, raising fears of supply disruptions across the Gulf and Red Sea. U.S. strikes on Iranian targets and attacks linked to Iran-backed groups kept energy traders focused on shipping routes and production risks. The Strait of Hormuz remains a major concern for China and other large oil buyers, as any disruption could restrict crude shipments and drive up global energy costs. Friday’s diplomatic report eased some of those fears, prompting traders to sell oil futures.
Chip Sector Caps Broader Gains
Semiconductor stocks declined even as the Dow and S&P 500 rose. Intel dropped about 3% after initially gaining on better-than-expected results. Broadcom and Advanced Micro Devices each lost roughly 2%, while Micron Technology fell about 5%. The Philadelphia Semiconductor Index declined more than 3% in early trading. Investors continue to question the pace of artificial intelligence spending after Alphabet and Tesla reported higher capital costs and cash usage. The cautious tone set the stage ahead of earnings from Microsoft, Amazon, and Meta.
Corporate Moves and Sector Rotation
Verizon advanced after raising its annual forecasts for adjusted profit and free cash flow. Real estate and communication services led gains in the S&P 500 as investors rotated into sectors less exposed to chip weakness. Citi raised price targets for Dell and Hewlett Packard Enterprise, with analyst Asiya Merchant maintaining buy ratings on both, citing demand for servers, networking equipment, and AI infrastructure. Citi lifted its HPE target to $74 from $70, implying about 55% upside from Thursday’s close.
Fed Policy and Tariffs Add to Uncertainty
Investors also assessed new U.S. tariffs of 10% and 12.5% on goods from 60 trading partners, linked to weak enforcement of forced-labor restrictions. The new duties followed the expiration of a temporary 10% global tariff. The Federal Reserve meets next week, with markets weighing inflation risks from energy costs. Futures pricing indicates about a one-in-three chance of an interest rate hike, up from 12% a week earlier. Fed Chairman Kevin Warsh has maintained the central bank’s focus on price stability and employment.
Despite Friday’s gains, the Dow and S&P 500 are on track for small weekly losses. The NASDAQ is headed for a decline of more than 1%, as technology weakness offsets the relief from lower oil prices.