US Stocks Rise as Hopes of Strait of Hormuz Reopening Pull Oil Prices Lower

US stocks climbed on Friday, as falling oil prices outweighed the impact of weakening consumer sentiment.

The S&P 500 rose 0.5%, while the tech-heavy Nasdaq 100 gained 0.4%.

Most of Friday's gains came after reports said Iran had presented conditions to the United States for reopening the Strait of Hormuz; the news pushed Brent crude down 2.1% to $104 a barrel.

US stocks briefly dipped after a University of Michigan survey released Friday showed US consumer sentiment fell to a four-month low in September, casting a shadow over the economic outlook.

But with the main factors that weighed on stocks this week easing, those concerns were largely set aside by the market.

The 10-year US Treasury yield edged lower after climbing sharply on Wednesday and Thursday.

Oil prices fell overnight amid reports that US and Iranian negotiators are exploring a phased agreement that would include Iran reopening the Strait of Hormuz and the US lifting its economic blockade of Iranian ports.

Matt Maley, chief market strategist at Miller Tabak & Co., said: "The drop in oil prices helped the stock market ignore the impact of further increases in long-term interest rates this week."

Citing people familiar with the matter, reports said the Federal Reserve is studying raising the asset-size threshold that triggers stricter supervision of large banks; bank stocks endured a dismal week, touching a technical correction.

Meta shares surged this month and are on track to join the ranks of companies with a market value of at least $2 trillion.

Citi global market strategists including Dirk Willer wrote in a report: "We are bullish on the US market because the AI narrative remains strong."

Traders increased bets on a Fed rate hike at its October meeting; New York Fed President Williams said Friday that if supply shocks affect prices, the central bank cannot ignore them.

At the close, the S&P 500 rose 0.5% to 7,743.41; the Dow Jones Industrial Average gained 0.9% to 51,828.62; the Nasdaq Composite added 0.5% to 27,068.72; the Nasdaq 100 rose 0.4% to 30,608.13; and the Russell 2000 edged up 0.1% to 2,837.552.