The S&P 500 and Nasdaq closed at record highs on Friday, boosted by optimism over possible talks between the US and Iran to end their war and a rally in Intel shares that extended a rally in semiconductor stocks. Iranian Foreign Minister Abbas Araqchi was expected in the Pakistani capital, Islamabad, on Friday to discuss proposals to resume peace talks, Pakistani government sources said. Additionally, White House Press Secretary Carolyn Levitt said in an interview with Fox News that President Donald Trump’s special envoy Steve Wittkoff and son-in-law Jared Kushner will travel to Islamabad on Saturday morning for talks with Iran mediated by Pakistan.

Markets had rallied in recent weeks on hopes that a resolution to the Iran war was on the horizon, along with expectations of strong corporate earnings, but as optimism for a peace deal faded this week, gains have faded as the Strait of Hormuz remains.

“The Iran thing seems kind of fragile, we’ve had a lot of back and forth. I believe it will continue, but for now, some rays of sunshine,” said Jed Ellerbrock, portfolio manager at Argent Capital Management in St. Louis, Missouri.

According to preliminary data, the S&P 500 rose 56.33 points, or 0.79%, to close at 7,164.73 points, while the Nasdaq Composite gained 395.35 points, or 1.61%, to close at 24,833.86. The Dow Jones Industrial Average fell 83.25 points, or 0.17%, to 49,221.11.

Semiconductors, one of the year’s strongest performers, continued to rally. The Philadelphia SE semiconductor index advanced to extend its record run to 18 consecutive sessions. Intel hit a record high following a better-than-expected second-quarter revenue forecast and outperformed the benchmark S&P index.

“All the doubts and fears about (return on investment) from the big tech companies — Amazon and Google and Microsoft and Meta — on AI capex — those concerns are receding really quickly, and that’s driving chip stocks and contractors and all the industrial companies,” Ellerbrock said.

Fellow chipmakers AMD and Arm also shoot high. The S&P 500 Technology Index outperformed the 11 major S&P sectors. Tech stocks also managed to shake off DeepSeek’s preview of its much-awaited new model.

The S&P 500 and Nasdaq both posted a fourth straight week of gains, their longest streak since the fourth quarter of 2024. However, the Dow posted a three-week high.

FED meeting is awaited

Attention is also turning to next week’s Federal Reserve meeting, which will be probed for signs of rate cuts and the central bank’s leadership succession. The US Justice Department is closing an investigation into Fed Chair Jerome Powell, clearing a roadblock to the confirmation of Kevin Warsh, Trump’s pick to lead the central bank. According to CME’s FedWatch tool, markets were pricing in a roughly 39% chance of a cut of at least 25 basis points at the Fed’s December meeting, up from about 23% in the previous session.

A strong start to the earnings season has helped bolster stocks against news of a volatile Iran. Revenue growth in the first quarter is now expected to be 16.1%, according to LSEG data, up from 14.4% in early April.