Wall Street experienced its best single trading day in over a year on Wednesday after the United States and Iran announced a two-week ceasefire and Tehran committed to reopening the Strait of Hormuz. The Dow Jones Industrial Average surged 1,325.46 points (2.85%) to close at 47,909.92. The S&P 500 gained 2.51% to 6,782.81, and the Nasdaq Composite climbed 2.80% to 22,635.00 — all posting their strongest sessions in twelve months.
Five Weeks of Pressure Released
The market rally reflected the sudden and dramatic removal of geopolitical risk premium that had weighed on equities throughout the five-week US-Iran conflict. Since the war began on February 28, stock markets had been under sustained pressure as the blockade of the Strait of Hormuz — through which 20% of global oil passes — created the most severe energy supply shock in modern history.
The conflict had caused Saudi Arabia, Kuwait, the UAE, Qatar, and Bahrain to collectively shut in an estimated 7.5 million barrels per day of production. Energy prices had spiked globally, inflation fears had resurged, and corporate earnings guidance had been revised downward across multiple sectors.
Biggest Winners
Energy stocks, airlines, cruise lines, and global industrials led the rally. Carnival Corporation shares jumped 10% as investors priced in a rapid recovery in cruise bookings following the Hormuz reopening. South Korean stocks surged more than 8% in midday trading, with Seoul’s markets among the biggest global beneficiaries of the ceasefire given South Korea’s heavy dependence on Middle Eastern energy imports.
Technology stocks also participated strongly in the rally, building on the sector’s resilience throughout the conflict period. Meanwhile, oil stocks — which had been among the few beneficiaries of the war-driven price surge — gave back gains as crude prices cratered.
Oil’s Historic Collapse
WTI crude oil closed down more than 16% at $94.41 — its largest one-day decline since April 2020. Brent crude settled approximately 13% lower at $94.75. The price collapse was immediately welcomed by consumers and industries globally, with expectations of lower petrol prices at the pump within days. Analysts at Goldman Sachs projected that US retail gasoline prices could fall by $0.40–0.60 per gallon within two weeks if the ceasefire holds.
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