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U.S. equities surged on Friday following Iran’s declaration that the Strait of Hormuz was “completely open,” coming shortly after a ceasefire agreement between Israel and Lebanon.
The S&P 500 advanced 1.2% to close at 7,126.06, surpassing the 7,100 mark for the first time. The Nasdaq Composite climbed 1.52%, finishing at 24,468.48 to record its 13th consecutive daily gain, marking its longest winning streak since 1992. Both major indexes established new intraday and closing peaks. The Dow Jones Industrial Average surged by 868.71 points, a 1.79% increase, closing at 49,447.43. The Russell 2000 also hit a new all-time high, with the small-cap index increasing by over 2%.
Iranian Foreign Minister Seyed Abbas Araghchi stated in a Friday post on X, “In line with the ceasefire in Lebanon, the passage for all commercial vessels through Strait of Hormuz is declared completely open for the remaining period of ceasefire, on the coordinated route as already announced by Ports and Maritime Organisation of the Islamic Rep. of Iran.”
Earlier on Thursday, President Donald Trump announced that the leaders of Israel and Lebanon had agreed to a 10-day ceasefire, effective 5 p.m. ET on the same day.
Following Iran’s announcement, oil prices sharply decreased as concerns about supply disruptions eased. U.S. West Texas Intermediate futures plunged nearly 12%, settling at $83.85 per barrel, and international benchmark Brent crude futures fell 9% to close at $90.38 per barrel.
Trump, who expressed gratitude to Iran for reopening the strait in a Truth Social post on Friday, also claimed in a subsequent post that Iran had agreed not to close the waterway again. Additionally, in a third post, he stated that the U.S. Navy’s blockade of Iranian ports would “REMAIN IN FULL FORCE” until a peace agreement with Tehran was finalized, noting that “THIS PROCESS SHOULD GO VERY QUICKLY IN THAT MOST OF THE POINTS ARE ALREADY NEGOTIATED.”
However, the strait’s reopening might be restricted, with Iran’s Tasnim news agency reporting that vessels and cargo associated with hostile nations, for example, would be prohibited. The Tasnim report further indicated that the strait would be closed if the U.S. blockade continues.
It remains unclear if a toll will be imposed on ships using the waterway.
Shares in major sectors susceptible to the strait’s closure, including cruise lines and airlines, saw a recovery. For example, Boeing and Royal Caribbean stock rose by 2% and 7%, respectively. Other companies like Amazon and Airbnb also recorded gains.
According to Anthony Saglimbene, chief market strategist at Ameriprise Financial, investors are “moving beyond this conflict.” He added, “I think the market has walked back the worst-case scenarios, and it sees a path for the U.S. and Iran to end the conflict and the Strait of Hormuz to remain open. As long as that remains the most likely path, then markets will discount it.”
On Thursday, Trump had commented that the conflict with Iran “should be ending pretty soon,” making these statements at a Las Vegas event and characterizing the situation as “going along swimmingly.” This reinforced his earlier week’s remarks that the war was “very close to over” and that Iran was eager to “make a deal very badly.”
S&P 500, 5-day
Optimism for a peace agreement has driven stocks to unprecedented highs this week, with all three major averages showing strong performances. The Dow, comprised of blue-chip stocks, gained 3.2%, the S&P 500 increased by 4.5%, and the Nasdaq saw a 6.8% rise.
“The easy part of this rally is probably behind us,” Saglimbene further commented. “Moving forward, particularly for technology, particularly for [the ‘Magnificent Seven’], we need to see not only earnings meet analyst estimates, but we need to see that the outlooks are strong.”