US stocks rallied on Wednesday after a two-week ceasefire between the United States and Iran eased concern over energy disruption and wider regional conflict. Oil prices fell sharply, bond yields moved lower, and traders rotated back into risk assets as attention turned to whether the truce can hold.
The S&P 500 rose 2.3% by mid-morning in New York, while the NASDAQ 100 gained about 2.9% and the Dow Jones Industrial Average climbed 2.8%. The Stoxx Europe 600 advanced 4.1%, and the MSCI World Index added 2.9% as investors moved back into equities across major markets.
The rally followed President Donald Trump’s announcement of a two-week ceasefire in the Iran war. The agreement came shortly before a US deadline tied to demands around the Strait of Hormuz. Pakistan played a mediating role in the talks, while Israel also agreed to the truce, according to a White House official. Iranian Foreign Minister Abbas Araghchi said safe passage through the strait would be possible for two weeks.
Even so, traders remained focused on conditions in the Gulf. Shipowners were still assessing whether transit through the Strait of Hormuz could resume safely. Therefore, markets treated the agreement as a near-term relief trigger rather than a final resolution.
Crude prices dropped as fears of a prolonged supply shock eased. West Texas Intermediate fell 18% to $93.18 a barrel, while Brent crude also sank and traded near the low-$90s. The sharp fall in oil reduced immediate pressure on inflation expectations and supported the move higher in stocks.
At the same time, the CBOE Volatility Index moved back toward pre-war levels near 21. Treasury yields also declined, with the 10-year US Treasury yield falling four basis points to 4.26%. The dollar weakened as haven demand faded. The Bloomberg Dollar Spot Index fell 0.9%, while the euro, pound, and yen all rose.
Airlines and cruise operators gained on hopes that fuel costs may stabilize. Chip, memory, and storage stocks also advanced as traders linked an eventual reopening of the Strait of Hormuz to smoother helium supply, which is used in semiconductor production.
Bank desks also warned that the rebound may be amplified by short covering and mechanical buying from systematic funds. Wall Street desks said the rally may be driven by more than relief alone.
Goldman Sachs traders warned of “a squeezy macro tape today” as investors unwind hedges and short positions. The bank also said Commodity Trading Advisors could add to the move as falling volatility and rising prices trigger systematic buying.
JPMorgan’s trading desk turned tactically bullish after modeling several paths around Trump’s deadline. Andrew Tyler, the bank’s head of global market intelligence, wrote, “This ceasefire should trigger a re-risking potentially similar to the post-Liberation Day pivot.”
Still, Goldman’s Richard Privorotsky said markets may try to look past Iran quickly because equities have already recovered much of the recent drawdown. He added, “Ceasefires are fragile by definition, and we’ve already seen strikes overnight across the Gulf.”
From a technical view, the S&P 500 moved back above its 200-day moving average. The next resistance sits near the 6,790 area, around the 50-day moving average. John Kolovos of Macro Risk Advisors said support lies between 6,495 and 6,610, and that holding those levels would reduce the chance of another move toward 6,100.
Positioning also supported the rebound. Barclays said volatility-control funds had cut US equity allocations to 56%, the lowest since July. As a result, light positioning left room for a sharp relief rally once geopolitical pressure eased.
The EIA said US crude inventories rose by 3.1 million barrels last week to 464.7 million barrels.
US gasoline inventories fell by 1.6 million barrels to 239.3 million barrels.
Crude stocks at the Cushing, Oklahoma hub rose by 24,000 barrels.
Exxon Mobil said 6% of its global first-quarter production was knocked out by Gulf disruption, with half tied to a Qatar LNG complex where two production lines were damaged.
Delta Air Lines said it expects more than $2 billion in higher fuel costs through June and kept its full-year profit forecast unchanged.
Levi Strauss raised its full-year outlook after reporting better-than-expected quarterly results and stronger demand through its own stores and website.
Super Micro Computer launched an internal probe into the circumstances surrounding server sales to China.
Elon Musk is seeking Sam Altman’s removal from his OpenAI roles through his legal challenge to the company’s for-profit conversion.
Arxis is seeking to raise as much as $1.06 billion in a US initial public offering.
Aehr Test Systems rose after third-quarter results prompted a rating upgrade tied to improving business momentum.
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