Stocks rallied worldwide Monday after a tentative U.S.-Iran agreement raised hopes for a reopening of the Strait of Hormuz, easing oil prices and lifting technology, airline and cruise shares.
By yourNEWS Media Newsroom
U.S. stocks jumped Monday afternoon and global markets climbed after the United States and Iran reached a tentative agreement to extend their ceasefire and reopen the Strait of Hormuz, easing pressure on oil prices after months of war-related disruption.
The Nasdaq led the rally on Wall Street as technology stocks surged. As of 1:18 p.m. EST, the Nasdaq was up 3.02%, while the S&P 500 rose 1.89%, the Dow Jones Industrial Average gained 1.42% and the Russell 2000 added 1.2%.
The market advance followed a sharp drop in crude oil prices. Brent crude fell 5.4% to $82.61 per barrel, returning to levels last seen in early March. Although that price remained above the roughly $70 level seen before the war began more than three months ago, it was well below the more than $100 per barrel reached just weeks earlier.
Investors responded to hopes that lower oil prices could ease pressure on households and businesses, which have faced higher costs for fuel, food, fertilizer and other essentials since the war with Iran disrupted energy markets.
Iran confirmed the agreement but said implementation would not begin until the deal is signed. Pakistan said the signing is expected Friday in Switzerland. Broader negotiations over unresolved issues, including Iran’s nuclear program, are expected to continue for 60 days.
The timetable leaves room for complications that could still derail the agreement. Even if the Strait of Hormuz is reopened, the energy industry may need months to return to full operating speed.
For now, however, the agreement gave financial markets a broad sense of relief.
Companies with large fuel costs were among the immediate beneficiaries. United Airlines rose 5.2%, American Airlines climbed 3.7% and cruise operator Carnival gained 4.1%.
Artificial intelligence-related stocks also moved sharply higher after recent volatility. The sector has swung between record-setting gains and sudden declines as investors debate whether enthusiasm over AI has pushed valuations too high.
Micron Technology jumped 9.9%, while Advanced Micro Devices rose 7.2%. Nvidia gained 3.5%, making it one of the largest contributors to the S&P 500’s advance. As Wall Street’s most valuable company, Nvidia carries more weight in the index than any other stock.
SpaceX, Elon Musk’s rocket company that also owns the artificial intelligence company xAI, rose 9.8% in its second day of trading on Wall Street. Its strong Nasdaq debut suggested continued investor demand for AI-related companies.
The market has valued SpaceX at more than $2.1 trillion, making it larger than Exxon Mobil, Bank of America and Coca-Cola combined.
Bond markets also reflected hopes that falling oil prices could reduce inflation pressure and lessen the need for additional interest-rate increases by central banks. The yield on the 10-year Treasury slipped to 4.46% from 4.48% late Friday.
Europe’s central bank last week became the first major central bank to raise rates to combat high inflation. Higher rates can help contain inflation but can also slow economic growth and weaken prices for investments, including stocks and cryptocurrencies.
Rate increases can be especially difficult for assets seen as highly priced, and some critics have warned that AI stocks may be in a bubble after rapid gains.
The Federal Reserve is scheduled to announce its latest interest-rate decision later this week, its first under new Chair Kevin Warsh. President Donald Trump nominated Warsh and has repeatedly called for lower interest rates.
Traders broadly expect the Fed to keep its main rate unchanged when its two-day meeting ends Wednesday. Before the U.S.-Iran agreement, traders had increased bets that the Fed might need to raise rates this year because of persistent inflation and a solid U.S. labor market.
Those expectations eased after the tentative Iran deal. Traders now see a 56% chance of a rate hike this year, down from 71% one week earlier, according to CME Group data.
Elsewhere on Wall Street, Roku slipped 0.9% after announcing that Fox Corp. would buy the streaming company in a cash-and-stock deal valued at about $22 billion. Roku shares had surged 20% Friday after early media reports of a possible deal. The acquisition would give Fox access to the Roku channel, first-party data and more than 100 million global streaming households. Fox shares fell 16.1%.
International markets also rallied. Indexes rose across Asia and Europe, with Japan’s Nikkei 225 jumping 5% to finish at a record high, one of the largest gains worldwide.
“This is great news,” said Takashi Hiroki, chief strategist at Monex. “Buying by foreign investors is leading the market with expectations of easing tensions around the situation in the Middle East.”
South Korea’s Kospi rose even more, climbing 5.2% with support from continued gains in AI-related stocks such as Samsung Electronics.
London’s FTSE 100 was an exception among major markets, slipping 0.4%.
The rally showed how strongly investors were watching the U.S.-Iran negotiations and the status of the Strait of Hormuz, a key route for global crude shipments. While the agreement has not yet been finalized and remains vulnerable to setbacks, markets responded Monday to the possibility that energy flows could resume and inflation pressure could ease.
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