Wall Street Rallies as Strait of Hormuz Reopens
U.S. stock markets surged on Friday, while oil prices dropped sharply, as improving geopolitical conditions and the temporary reopening of the Strait of Hormuz boosted investor confidence.
Major U.S. Indices Post Strong Gains
By 10:57 ET (14:57 GMT), the S&P 500 rose 1.3% to 7,130.80 points. The NASDAQ Composite gained 1.6% to 24,478.01, while the Dow Jones Industrial Average jumped 2.1% to 49,585.15, reflecting broad-based market strength.
Oil Prices Plunge as Supply Fears Ease
At the same time, oil markets saw significant declines. Brent crude dropped 12.6% to $86.84 per barrel, while U.S. West Texas Intermediate (WTI) fell 13.5% to $81.87 per barrel, as supply concerns eased following the reopening of the key shipping route.
Hormuz Reopening Lifts Market Sentiment
Iran confirmed that the Strait of Hormuz is open to commercial shipping during the ceasefire in Lebanon. The move follows a 10-day truce announced by U.S. President Donald Trump between Israel and Lebanon.
While the waterway is open, the U.S. clarified that its blockade on Iranian ports and vessels remains in place until a broader agreement is reached.
Lower Oil Prices Drive Risk-On Momentum
The sharp drop in crude prices helped fuel a strong “risk-on” rally across markets. Lower energy costs reduced inflation concerns, supporting gains in equities, cryptocurrencies, and bonds.
However, analysts noted that much of the positive news had already been priced into markets after weeks of optimism around a potential resolution.
Rate Cut Expectations Rise
The easing in oil prices and geopolitical tensions increased expectations that the Federal Reserve could cut interest rates later this year. Traders now see a higher probability of rate cuts by December, further supporting equities.
Progress Toward U.S.-Iran Agreement
Market sentiment was also supported by reports that Washington and Tehran are discussing a framework to end the conflict. The proposed deal could involve the release of $20 billion in frozen Iranian funds in exchange for limits on uranium enrichment.
The ongoing ceasefire between Israel and Lebanon has further improved the diplomatic outlook, with additional negotiations expected.
Record-Breaking Week for Wall Street
Optimism around de-escalation helped push the S&P 500 and NASDAQ to record levels this week, marking a strong recovery from earlier declines following the outbreak of the Middle East conflict.
The NASDAQ is also approaching one of its longest winning streaks in recent history, highlighting the strength of the current rally.
Earnings Season and Tech Sector in Focus
Investors are closely monitoring the start of the earnings season, with early results pointing to a resilient U.S. economy despite recent energy shocks.
The technology sector remains a key driver, with companies linked to artificial intelligence continuing to lead the market rebound.
Stock Movers: Netflix Drops, Travel Stocks Surge
Among individual stocks, Netflix shares fell sharply after issuing weaker-than-expected guidance and announcing the departure of Chairman Reed Hastings.
Alcoa also declined following disappointing earnings, while Autoliv surged after reporting stronger-than-expected results.
Travel and leisure stocks were among the top gainers, benefiting from falling fuel costs. Meanwhile, energy stocks declined in line with the drop in oil prices.
