Dow soars 1,400 points, oil plunges near $90 as Trump announces two-week ceasefire with Iran
US stocks surged Wednesday morning as oil plunged near $90 after President Trump said he had agreed to a two-week ceasefire with Iran — paving the way to reopen the Strait of Hormuz.
The Dow Jones Industrial Average had soared 1,389 points, or 3%, as of 9:38 a.m. ET, while the S&P 500 and Nasdaq futures jumped 2.5% and 3.2%, respectively.
Brent crude oil prices dropped 16.6% to $91.09 a barrel – its lowest price in nearly a month after news that Iran would allow the temporary safe passage of ships through the strait, a vital maritime route for 20% of the world’s oil supply.
US stock futures surged Wednesday morning as oil plunged near $90 a barrel. AFP via Getty Images
West Texas Intermediate crude also fell 5.6% to $70.94 a barrel.
In a Truth Social post Tuesday evening, less than two hours before Trump’s deadline for Iran to reopen the strait or face a bombardment of its power plants and bridges, the president announced a “double sided” two-week ceasefire.
“I agree to suspend the bombing and attack of Iran for a period of two weeks,” Trump wrote, adding that the ceasefire was subject to the “COMPLETE, IMMEDIATE, and SAFE OPENING of the Strait of Hormuz.”
“We received a 10 point proposal from Iran, and believe it is a workable basis on which to negotiate,” he added.
Iran’s Supreme National Security Council said in a statement that it has agreed to reopen the strait for two weeks, though it emphasized it was not a full-fledged peace agreement. Israel also reportedly agreed to the ceasefire.
“Wall Street is exhaling as President Trump pressed pause on the destruction button, as there are enough signs that there’s a will to negotiate a deal, and that optimism is helping to end this stock market correction,” Robert Edwards, chief investment officer at Edwards Asset Management, said in a note Wednesday.
“Even with this optimism, oil prices and stocks are still inversely correlated for the time being,” Edwards added. “It’s unclear how long these declines in oil will last, but it’s looking more likely that the spike in oil prices in recent weeks was indeed temporary.”
Trump wrote in a Wednesday morning Truth Social post that as part of the ceasefire, the US will work with Iran to “dig up and remove all of the deeply buried (B-2 Bombers) Nuclear ‘Dust’” – adding to market optimism.
Traders are eager for the free flow of crude through the Persian Gulf to resume – but analysts have warned that oil prices could remain elevated, since it will take time and money to repair damages at Middle East energy facilities hit in air strikes.
Energy supply shocks tend to ripple through consumer prices, so there are concerns that stubbornly high oil costs could reheat inflation and keep interest rates high.
Fed Chair Jerome Powell has said there is no need for an interest rate hike, and odds for an interest-rate cut jumped Wednesday morning following news of the ceasefire.