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US stocks surged on Wednesday after a surprise two-week ceasefire agreement between the United States and Iran eased geopolitical tensions and sent oil prices sharply lower, boosting risk appetite across global markets.
The announcement, made just hours before US President Donald Trump’s deadline for Iran to reopen the Strait of Hormuz, triggered a broad “risk-on” move.
Equity markets in Asia and Europe rallied between 4% and 5%, while crude prices tumbled more than 14% on expectations that energy flows could resume through the critical waterway.
Ceasefire fuels global market rally
Dow Jones Industrial Average rose by more than 1,366 points, or around 2.93%, while S&P 500 and Nasdaq 100 indices climbed roughly 2.48% and 3.15%, respectively.
The rally followed Trump’s announcement that he would suspend 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 agreement to reopen the Strait of Hormuz for two weeks, contingent on a halt in attacks. Israel has reportedly agreed to the ceasefire as well.
Markets, which had been under pressure amid escalating conflict, responded swiftly. Stocks that had lagged earlier in the year rebounded, with megacap names such as Nvidia, Amazon, and Tesla posting notable gains.
Financial and industrial stocks, including JPMorgan and Boeing, also advanced.
Oil plunge hits energy stocks, lifts travel sector
Crude oil prices dropped sharply following the ceasefire announcement. West Texas Intermediate crude fell more than 16% to around $94 per barrel, while Brent crude declined over 14% to near $93.
The decline in oil prices weighed heavily on energy stocks. Shares of Exxon Mobil fell more than 7.5%, Chevron dropped over 6.2%, and Occidental Petroleum slid more than 10%.
In contrast, sectors sensitive to fuel costs saw strong gains. Airline stocks surged, with American Airlines and United Airlines rising 10% and 13.7%, respectively, while Delta Air Lines advanced 10.8%. Cruise operators Carnival and Norwegian Cruise Line also posted gains of over 12%.
Policy outlook and risks remain in focus
The ceasefire has also influenced expectations for monetary policy.
Interest-rate futures now indicate a 56% probability of a 25-basis-point rate cut by the end of 2026, a notable shift from prior expectations of no easing this year.
Before the conflict began, markets had anticipated at least two rate cuts in 2026. The surge in oil prices during the war had raised concerns about inflation, complicating the Federal Reserve’s policy trajectory.
Investors are now awaiting further signals from policymakers, including remarks from Federal Reserve officials Mary Daly and Christopher Waller, as well as minutes from the central bank’s March meeting.
Market participants are also closely watching upcoming inflation data to assess whether elevated energy prices during the conflict have translated into broader price pressures.
While the ceasefire has provided temporary relief, analysts caution that the path forward remains uncertain, with geopolitical developments likely to continue driving volatility across asset classes.
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