Quick overview

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The reopening of the Strait of Hormuz sent U.S. equities sharply higher on Friday, with all three major benchmarks closing in positive territory.

The S&P 500 and the Nasdaq Composite notched fresh record highs, while the Dow Jones Industrial Average surged nearly 1,000 points. Meanwhile, oil prices tumbled as easing geopolitical tensions in the Middle East boosted investor sentiment.

The Dow rose 1.79% to 49,447.92, the S&P 500 gained 1.19% to 7,125.36, and the Nasdaq climbed 1.52% to 24,468.48.

Strait of Hormuz reopening lifts markets

Iran’s Foreign Minister Abbas Araghchi announced that the vital shipping route would be fully open to commercial vessels for the remainder of the ceasefire period.

The move followed a 10-day ceasefire announcement by Donald Trump between Israel and Lebanon. Ongoing Israeli strikes against Hezbollah targets had previously complicated negotiations involving Iran and the United States.

Trump said the key maritime chokepoint was now “fully open,” though he noted that U.S. restrictions on vessels linked to Iran remain in place until a broader agreement is finalized.

The earlier closure of the strait had fueled fears of a global inflation shock and expectations that central banks would keep interest rates higher for longer. However, with oil prices falling, market expectations for rate cuts by the Federal Reserve have increased, with traders now pricing in roughly a 60% chance of a cut by December.

Oil prices tumble

“The full reopening of the Strait of Hormuz has triggered a sharp drop in oil prices, a surge in equities, and investor euphoria,” said Jake Dollarhide, CEO of Longbow Asset Management.

Brent crude futures fell 10.4% to $89.02 per barrel, while U.S. WTI crude dropped 12.1% to $83.19 per barrel.

Hopes for a broader deal

Optimism was also supported by a report from Axios indicating that Washington and Tehran are discussing a three-page plan to end the conflict, potentially involving the release of frozen Iranian funds in exchange for nuclear concessions.

However, Trump later told Bloomberg that Iran had agreed to indefinitely suspend its nuclear program, adding that no frozen funds would be released.

Record highs and earnings focus

Hopes for a lasting de-escalation have fueled a strong weekly rally, pushing the S&P 500 and Nasdaq to repeated record closes. The rebound underscores a remarkable recovery from March’s selloff, triggered by the initial outbreak of hostilities.

Investors are now turning their attention to the first-quarter earnings season, with early results pointing to a resilient U.S. economy despite the energy shock linked to the conflict with Iran.