US close: Stocks jump as bond yields ease, oil price sinks on peace deal hopes

(Sharecast News) - Falling bond yields and a sharp decline in oil prices pushed US stock indices firmly higher on Wednesday on the back of rising optimism that Washington and Tehran will soon reach a peace deal.

The Dow finished 1.3% higher while the S&P 500 and Nasdaq snapped a three-day losing streak to rise 1.1% and 1.5% respectively.

Expectations were also sky high for chip giant Nvidia to impress with its quarterly earnings after the closing bell, with shares in the world's biggest company rebounding slightly after sharp falls in recent days, boosting buying in the wider semiconductor sector.

"Stock markets pushed into the green on Wednesday afternoon as investors awaited results from the world's largest company," said AJ Bell head of financial analysis Danni Hewson.

"Such is Nvidia's scale that even in an environment where geopolitical headlines are dominating, it can still have a meaningful say in market sentiment. This reflects the central place AI holds in hopes for continuing corporate growth - with Nvidia's results a key test of whether the theme still has legs."

Nvidia didn't disappoint after the close, beating analysts' forecasts with record quarterly revenues of $81.62bn and impressing with its forward guidance. The company also added a whopping $80bn to its share buyback plan and raised its quarterly dividend to 25cents from 1 cent previously.

Even a hawkish set of minutes from the latest Federal Open Market Committee meeting weren't enough to dampen the mood on Wall Street. Details of the 28-29 April meeting revealed that policymakers were ready to hike rates "if inflation were to continue to run persistently above 2%". Inflation hit a three-year high of 3.8% in April, according to the latest data, on the back of surging energy prices.

Oil prices, however, sank on Wednesday following the latest comments from Donald Trump, who said the US was in the "final stages" of talks with Iran, though he once again threatened to attack Tehran if a deal was not reached. "We'll either have a deal or we're going to do some things that are a little bit nasty. But hopefully that won't happen," Trump said.

That was enough for Brent crude to drop 5.6% to $105.02 a barrel and WTI crude to fall 5.7% to $98.26 a barrel on hopes that oil supply and production disruptions will begin to ease.

Meanwhile, bonds recovered after a sell-off in recent days, with the 10-year US Treasury yield hitting a 16-month high (4.671%) and the 30-year yield rising to its highest since 2007 (5.174%) on Tuesday. The 10-year and 30-year yields dropped 7.9 basis points and 5.5 basis points respectively.

Nvidia finished 1.3% higher ahead of its earnings, rebounding slightly after dropping 6.4% over the past three days. Chip peers Micron Technology, Intel and AMD were putting in a more impressive performance after recent heavy falls, rising 5%, 7% and 8% respectively.

A host of other corporate earnings were keeping investors busy, with Target, VF Corp and Hasbro all underwhelming with their latest numbers. In particular, Target dropped 4% despite reporting its strongest sales growth in four years with comparable sales up 5.6%.

One bright spark was Lowe's, which erased earlier losses to push high after beating analysts' estimates with its quarterly revenues, helped by a 15.5% surge in online sales.

Lastly, in economic data, US mortgage applications fell 2.3% in the second week of May, according to the Mortgage Bankers Association, pulling back after a 1.7% gain the preceding week amid ongoing economic uncertainty and higher mortgage rates.