Renewed Hopes Of Peace Deal Help Equities Move Higher

Scott Poore, AIF^®, AWMA^®, APMA^®

May 26, 2026

Slightly easing Middle East tensions helped equities move higher last week, albeit less concentrated. The correlation between the price of oil and equities has been high since the beginning of the Iranian conflict. Over the last 58 trading days since the conflict began, when oil was higher, equities were lower and vice-versa.¹ However, the price of oil declined last week by more than 8% and is trading lower this morning on renewed hopes that a peace deal can be brokered in the coming days.¹ News over the weekend indicated that the U.S. and Iran had made progress on a deal, then over the Memorial Day holiday, U.S. "defensive" strikes in southern Iran dented the optimism.² The labor market continues to show slight improvement. The payrolls reports from the previous two months have shown solid job growth exceeding 100,000 jobs and beating market expectations.³ Jobless Claims have been hovering around 200,000 so far this year. As a reminder, claims usually jump into the 300,000+ range prior to recessions.⁴ April saw those switching jobs experience better opportunities. For those already employed, job switchers were able to improve their pay by the most in almost 3 years in April. The economic data continues to help equities remain elevated despite the tensions in the Middle East. The Atlanta Fed recently upgraded their GDPNow estimate for the 2nd from +4.0% to +4.3%.⁵ Consumer spending is driving much of the forecast with Redbook Sales still elevated at +8.1%, well above the +4.4% historical average.⁶ If the recent trend of labor market improvements continues and the consumer can get any kind of relief from a brokered peace deal in the Middle East leading to cheaper prices at the pump, the U.S. economy could be in position to finish the year on a high note. There may still be more headlines this week that could sway markets back-and-forth with daily updates on the U.S.-Iran front.

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