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US stocks surged on Wednesday, capping a powerful global rally after a last-minute ceasefire agreement between the United States and Iran eased geopolitical tensions and triggered a sharp drop in oil prices.
The two-week truce, announced by US President Donald Trump just hours before a self-imposed deadline for escalation, helped restore investor confidence after weeks of volatility driven by conflict in the Middle East.
The Dow Jones Industrial Average rose 1,325.46 points, or 2.85%, while the S&P 500 gained 2.51% and the Nasdaq Composite climbed 2.9%.
The rally was mirrored globally, with European shares rising 3.9% and MSCI’s World index posting its biggest one-day gain in a year.
Ceasefire lifts sentiment, but uncertainty lingers
The market rebound followed Trump’s announcement that he would pause military action against Iran for two weeks to allow negotiations to proceed.
“I agree to suspend the bombing and attack of Iran for a period of two weeks,” Trump said in a Truth Social post. “We received a 10-point proposal from Iran, and believe it is a workable basis on which to negotiate.”
Iran’s Supreme National Security Council also signaled it would reopen the Strait of Hormuz—through which roughly one-fifth of the world’s oil flows—on the condition that hostilities cease.
Despite the optimism, skepticism remains about the durability of the agreement.
Adding to uncertainty, Iran’s parliamentary speaker Mohammad Bagher Ghalibaf said the US had already violated the ceasefire, highlighting persistent distrust between the two sides.
Tehran also halted oil tanker traffic through the Strait of Hormuz as a response to intensified Israeli strikes on Lebanon, which were not covered under the US-Iran deal.
Oil plunges as Strait of Hormuz reopening boosts outlook
Oil markets reacted sharply to the ceasefire news, with crude prices posting their steepest declines in years.
West Texas Intermediate crude fell more than 16% to settle at $94.41 per barrel, marking its biggest daily drop since April 2020. Brent crude dropped around 13% to $94.75.
The decline reflects expectations that energy flows through the Strait of Hormuz will resume, easing supply constraints that had driven prices above $100 during the conflict.
Still, signs of normalization remain tentative. Ship-tracking service MarineTraffic reported that some vessels had resumed transit, but overall traffic levels remain subdued compared to pre-war conditions.
Front-month WTI and Brent futures both settled below $100, though analysts caution that infrastructure damage and geopolitical risks could delay a full recovery in supply.
Cyclical stocks lead gains as global markets rebound
The equity rally was led by sectors hardest hit during the conflict, particularly those sensitive to energy costs and global trade disruptions.
Semiconductor stocks surged, with the VanEck Semiconductor ETF jumping more than 5%. Broadcom rose over 5%, while Micron Technology gained more than 7%.
Meta stock surged 6.5% after unveiling its new artificial intelligence model, Muse Spark.
Travel and leisure stocks also rebounded strongly. Airlines, cruise operators, and homebuilders—all pressured by rising fuel costs and economic uncertainty—posted notable gains.
International markets outperformed the US, reflecting their greater exposure to energy shocks.
Meanwhile, the CBOE Volatility Index fell to its lowest level since the start of the conflict, signaling easing investor anxiety.
Despite the strong rebound, market participants caution that volatility is likely to persist as geopolitical developments continue to evolve.
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