U.S. equity markets closed higher ahead of a long holiday weekend, buoyed by expectations of easing tensions in the Middle East and sustained enthusiasm for artificial intelligence-related trading. The S&P 500 Index rose 0.4%, marking its eighth consecutive weekly gain and its longest winning streak since 2023. The Nasdaq 100 Index advanced 0.2%, as traders continued to pour into stocks benefiting from artificial intelligence (AI) and the broader technology sector. The VIX volatility index hovered near its lowest level since early February, indicating stable market sentiment despite uncertainties surrounding the conflict involving Iran. Equity investors largely overlooked concerns that disruptions to energy supplies could reignite inflation, instead focusing on signs of economic resilience and the expanding trend of AI-related spending within U.S. corporations. Daniel Kirsch, Head of Options at Piper Sandler, noted that the AI trade "remains in favor, with investors focused on growth rather than worrying about inflationary pressures." A basket of stocks related to the Anthropic ecosystem has surged over 50% since early March. Shares of technology hardware and server companies extended their recent gains, as investors maintained a positive outlook on the powerful boost AI provides to the sector. The University of Michigan's preliminary May reading on U.S. consumer sentiment fell to a record low, influenced by the war involving Iran, with long-term inflation expectations deteriorating significantly. Federal Reserve Governor Christopher Waller suggested the next interest rate move could be either a hike or a cut, with traders fully pricing in the expectation of a rate hike by December. At the close, the S&P 500 Index was up 0.4% at 7,473.47 points. The Dow Jones Industrial Average gained 0.6% to 50,579.7 points. The Nasdaq Composite Index rose 0.2% to 26,343.97 points. The Nasdaq 100 Index increased 0.4% to 29,481.64 points. The Russell 2000 Index climbed 0.9% to 2,869.225 points.