The S&P 500 and the Nasdaq posted record closing highs on Thursday after news reports said the US and Iran had reached a draft agreement to extend their ceasefire for 60 days, while investors also digested key inflation data.

The Dow Jones Industrial Average, which was subdued during the session, eked out small gains in afternoon trade to finish at another closing high.

The agreement still needs US President Donald Trump's approval, sources told Reuters. Iran's Tasnim news agency, meanwhile, said the text of a potential memorandum of understanding with the US has not yet been finalised or confirmed.

"Traders are on a hair trigger with the back-and-forth on deal news, and have been leaning long to avoid getting trampled by a better-than-expected outcome. The harder part is that the inflationary forces may not abate as fast as markets want," said Jamie Cox, managing partner at Harris Financial Group.

Economic data showed US inflation increased at its fastest pace in three years in April, driven by higher energy prices amid the Iran war. Meanwhile, US GDP for the first quarter was revised lower to a 1.6 percent annualised increase, with momentum expected to slow this quarter.

The Dow Jones Industrial Average rose 24 points, or 0.05 percent, to 50,668, the S&P 500 gained 43 points, or 0.6 percent, to 7,563 and the Nasdaq Composite gained 242 points, or 0.9 percent, to 26,917.

The S&P 500 healthcare index posted strong gains. Eli Lilly advanced 4 percent after CVS Health said it would restore the drugmaker's weight-loss injection, Zepbound, to its coverage and add its newly approved obesity pill Foundayo.

Tech shares also moved higher. Microsoft gained 3.5 percent after news website the Information reported that the company would release a new coding model next week.

Marvell Technology rose 3 percent after UBS raised its target price to US$230 from US$195.

The company's shares have more than doubled so far this year. Snowflake shares soared 36 percent after the data analytics firm lifted its annual product revenue forecast and announced a five-year AI infrastructure deal worth US$6 billion with Amazon Web Services.

Peers Datadog and MongoDB also climbed.

Renewed confidence in AI and earnings growth momentum have underscored the recent rally despite the Middle East tensions, which have increased inflationary expectations.

"Markets continue to look through these risks because the global economy and corporate earnings remain relatively resilient," said Jitania Kandhari, deputy CIO, solutions and multi-assets, at Morgan Stanley Investment Management.

"Geopolitical instability could ultimately accelerate spending in areas tied to AI, including cybersecurity, defence technology, energy infrastructure and supply-chain resiliency, reinforcing the long-term investment case." (Reuters)



Edited by Cecil Wong