Closed US stocks rose sharply on Wednesday, after the announcement of a last-minute two-week truce agreement between the United States and Iran, which boosted investor sentiment.
The three major US indices rose strongly at the opening bell, driven by a broad rally as a result of relief after a Pakistan-brokered agreement led to the suspension of the war for two weeks.
The Standard & Poor’s 500 Index rose by 166.63 points, or 2.52%, to close at 6,783.48 points, while the Nasdaq Composite Index rose by 620.05 points, or 2.82%, to 22,637.90 points. The Dow Jones Industrial Average also rose by 1,329.56 points, or 2.85%, to reach 47,914.02 points.
The conflict, which began with joint US-Israeli strikes on Iran on February 28, has confounded global markets, disrupted oil supplies, and raised fears of rising inflation.
A senior Iranian official told Reuters that the vital Strait of Hormuz, through which about a fifth of the world’s oil supplies pass, could reopen on Thursday or Friday before peace talks if countries reach a framework for a truce.
“This is an expected move today, and there is still a lot of work to be done, but the market is feeling a lot of relief,” said Mike Dixon, head of portfolio management at Horizon Investments. “It could have been much worse, and there is good reason to believe that it was possible, so we are now seeing a rally in the hardest-hit sectors.”
The Dow Jones Transportation Index, which is sensitive to economic activity, recorded its highest level ever, while the Russell 2000 index outperformed its counterparts of major companies.
The gains were not limited to the United States, as European stocks rose by 3.9%, while the MSCI global index rose by more than 3%, recording the largest daily gains in a year.
“Most other countries were more exposed to the energy and food shock than the U.S., so this represents greater short-term relief for global stocks,” said investment strategist Ross Mayfield.
The volatility index, a measure of investor anxiety, fell to its lowest level since the start of the war. Oil futures also fell, with West Texas Intermediate crude falling by 16.4% and Brent crude falling by 13.3%, both settling below $100 per barrel.
Minutes from the Federal Reserve’s March meeting, released on Wednesday, showed increased openness to raising interest rates, after policymakers raised their inflation forecasts for 2026 due to the war-related oil shock.
The sectors hardest hit since the start of the war, such as commercial airlines, travel and leisure, and homebuilding, have seen a strong recovery.
Delta Airlines shares rose despite its weak expectations for second-quarter profits, as it refrained from updating its annual forecasts due to the uncertainty related to the war with Iran. Shares of Southwest Airlines and United Airlines also rose.
Cruise companies such as Carnival and Norwegian Cruise Line recorded strong gains. Levi Strauss shares also jumped after the clothing company raised its annual sales and profit forecasts.
