The S&P 500 closed up 1.4% at 7,363.68 on May 5-6, 2026, hitting a record high as investors bet that a potential US-Iran diplomatic breakthrough could reshape the geopolitical landscape. The Nasdaq did even better, gaining 2% to reach 25,838.94, also a record.
Meanwhile, West Texas Intermediate crude futures dropped more than 6% to roughly $95 per barrel.
What’s driving the rally
US and Iranian officials are reportedly finalizing a 14-point memorandum of understanding aimed at ending hostilities and reopening the Strait of Hormuz. The proposed memorandum would also set the stage for follow-up discussions on nuclear matters and asset unfreezing in the months ahead.
Bonds rallied alongside equities, which is a somewhat unusual pairing. Normally, a strong risk-on move in stocks pulls money out of bonds. The fact that both rose simultaneously suggests investors are reading this as broadly deflationary: cheaper energy, lower input costs, and reduced tail risk all at once.
