Major US stock indices climbed sharply on Wednesday following a collaborative agreement between the US and Iran for a fourteen-day ceasefire, which caused crude oil prices to plunge.
At the opening bell, the Dow Jones Industrial Average rose 393.7 points, or 0.85%, to 46,978.17. The S&P 500 rose 137.5 points, or 2.08%, to 6,754.36, while the Nasdaq Composite rose 803.4 points, or 3.65%, to 22,821.209.
The breakthrough occurred just hours prior to a deadline established by Trump, which demanded that Iran reopen the Strait of Hormuz to restore the global flow of oil from the Persian Gulf.
In an eleventh-hour development, the United States, Iran, and Israel reached an accord for a two-week cessation of hostilities.
Late Tuesday, Trump announced he would refrain from launching threatened strikes against Iranian infrastructure, including power grids, bridges, and other civilian facilities.
Simultaneously, Iran’s foreign minister said that maritime passage through the strategic strait would resume for the duration of the truce under the oversight of the Iranian military.
In the energy markets, benchmark US crude plummeted by $18.43 to $94.52 per barrel, representing a nearly 16% crash. International standard Brent crude followed suit, sliding $15.54 to settle at $93.73 per barrel, while natural gas futures saw a decline of approximately 5%.
Analysts called the market reaction “somewhat euphoric” and cautioned that much uncertainty remains.
“I will caution that this is a ceasefire, not a peace treaty,” said Steve Sosnick of Interactive Brokers, according to AFP.
“And in some ways, there are still unresolved questions,” added Sosnick.
Key Stock Movers
Airline shares rallied with United Airlines and Southwest Airlines rising more than 10%.
Oil companies such as ExxonMobil and Chevron shed more than 5%.