The Iran deal rally that unfolded on Thursday sent shockwaves through every asset class — the S&P 500 climbed 1.75% as Trump’s surprise ceasefire announcement with Iran cratered oil, rallied bonds, and exploded semiconductors higher.

Index Performance

The Headline That Moved Everything

The session began on an ominous note. Pre-market, Trump posted on Truth Social threatening to strike Iran’s Kharg Island — the country’s primary oil export hub — and seize control of its oil and gas infrastructure. Markets braced for escalation.

At 1:28 PM ET, a Truth Social post flipped the tape: airstrikes canceled. Trump claimed Tehran’s top brass had greenlit a ceasefire framework, with a Geneva signing slated for this weekend and the Strait of Hormuz reopening on the spot.

The reality check: It’s far from a done deal. Tehran immediately hedged, calling it “progress” rather than a final agreement. Israel, meanwhile, slapped a massive list of hardline conditions on the table—demanding the total dismantlement of Iran’s nuclear infrastructure and a hard stop to proxy funding. (https://www.bbc.com/news/articles/c78y6w78828o)

But the market didn’t care about the fine print.

Oil Collapses, Bonds Rally

The geopolitical risk premium that had been propping up crude evaporated in real time. WTI dropped from $91.85 to $86.42 — a move that also pulled down natural gas. As we noted yesterday, the oil strength was never structural; it was headline-driven. Today’s headline simply ran in the opposite direction.

Falling energy prices fed directly into the rates market. The 10-year yield dropped from 4.554% to 4.459%, and the 2-year fell from 4.145% to 4.062%. The dollar index slipped from around 100.03 to 99.65 — a modest but directionally consistent move with the broader risk-on tone. Gold, meanwhile, surged from $4,094.10 to $4,233.80 — which suggests this wasn’t pure risk-on euphoria. Safe-haven demand held firm even as equities rallied, reflecting residual uncertainty around whether the deal actually holds.

Rates, Dollar, Commodities

2Y yield: 4.145% → 4.062% ▼ 10Y yield: 4.554% → 4.459% ▼ Dollar Index: 100.029 → 99.653 ▼
Gold: $4,094.10 → $4,233.80 ▲ WTI Crude: $91.85 → $86.42 ▼ Natural Gas: $3.178 → $3.080 ▼

Semiconductors: The Main Event

The SOX index surged nearly 8% — one of its sharpest single-day moves in recent memory. The names leading the charge:
Micron: +11.63% ARM: +11.35% Marvell Technology: +11.03% Intel: +9.30% AMD: +7.92% Qualcomm: +6.12%

Yesterday’s thesis was that semis were being liquidated to fund the SpaceX IPO. If that’s true, today’s bounce suggests the overhang is starting to clear — or at least that the Iran catalyst was powerful enough to override it. Either way, the price action was decisive.

Intel & the CPU Trade

Intel surged 9.30% on the session, continuing the relative strength narrative flagged in yesterday’s post. The catalyst this time was concrete: Bank of America upgraded Intel, citing expectations for CPU revenue growth. The upgrade landed on fertile ground — the stock had already been building a base after shaking out exhausted holders, and the foundry thesis remained intact following last week’s Google/Nvidia report.

The BofA upgrade also had a ripple effect across the broader CPU space. With Intel getting a fundamental re-rating, capital rotated into CPU-adjacent names as the market began pricing in a potential share recovery story — a meaningful shift from the recent narrative of Intel ceding ground to Nvidia and ARM.

Space Sector Rides the IPO Wave

With the SpaceX listing still front of mind, the broader space sector continued its momentum. Echostar gained 11.19%, Rocket Lab surged 9.25%, Intuitive Machines jumped 15.51%, and AST SpaceMobile added 11.75%. The narrative around space infrastructure is clearly attracting fresh capital, and SpaceX’s IPO is functioning as a rising tide for the entire sector.

Software: The Odd One Out

Not everything participated. Software was a conspicuous laggard, though the damage wasn’t uniform. Oracle’s earnings — despite beating on top and bottom lines — disappointed on margins tied to massive AI datacenter build-outs, casting a shadow over the broader sector. The Software-Application space took the hardest hit, with names like ADSK (-7.10%), WDAY (-5.05%) leading the declines. Adobe dropped 6.25% despite solid earnings and strong forward guidance — the concern was the leadership transition. With a CEO successor search already underway ahead of a December deadline, CFO Dan Durn’s departure to Marvell now leaves both seats in flux simultaneously. The business is fine; the uncertainty is purely at the top.

Microsoft was the notable M7 outlier, slipping 1.77% — a combination of software sector drag and the distraction of Bill Gates appearing at an Epstein-related congressional hearing. Make of that what you will.

Infrastructure software held up relatively better, with CRWD (+6.76%) and PANW (+6.20%) bucking the trend — a reminder that not all software trades the same way in a risk-on session.

Macro Data: PPI Complicates the Picture

ECB Rate Decision
The ECB held rates at 2.4%, in line with expectations (prior: 2.15%). The market largely shrugged — with Iran dominating the tape, European monetary policy was an afterthought.

May PPI — A Fly in the Ointment
May PPI came in at 6.5% year-over-year — the highest reading since 2022 — against expectations of 6.4% and April’s revised 5.7%. That’s not a number the Fed wants to see. The saving grace was core PPI, which printed at 4.9% — below the 5.4% forecast and matching April’s revised figure. Still, the headline number is hard to ignore. Disinflation is not a clean, linear process.

The 30-year Treasury auction also tailed. The $22 billion offering cleared at 5.020%, tailing the when-issued yield by 1.2 basis points of 5.008% at the time. The bid-to-cover ratio of 2.328x fell short of the recent six-auction average of 2.43x — a weaker result than Wednesday’s 10-year auction, suggesting the long end of the curve is still under pressure.

Bottom Line

Today was a geopolitical trade, plain and simple. The Iran deal — if it holds — removes one of the biggest macro overhangs of the past several weeks. Oil down, yields down, dollar down, equities up: a textbook risk-on unwind of a war premium.

The key question now is whether the deal actually gets signed. Trump has been characteristically dramatic throughout this process, and until ink is on paper, the Strait of Hormuz remains a live risk. Watch crude on any headlines suggesting the talks are stalling — that’s your leading indicator for how quickly this rally unwinds.

Semis are the sub-plot to watch. The SpaceX IPO overhang cleared yesterday, and today’s violent bounce suggests capital may already be rotating back. If the sector holds next week, that rotation thesis gets a lot harder to ignore.