Nasdaq rises as oil tumbles after U.S.-Iran deal

A preliminary U.S.-Iran agreement to end their war and reopen the Strait of Hormuz jolted markets lower on oil and higher on stocks, giving Wall Street a fresh burst of relief. Crude fell more than $4 a barrel as investors moved quickly to price in a wider flow of energy through the world’s most important oil chokepoint.

The Nasdaq climbed 3% in the follow-through rally, while the Dow Jones Industrial Average closed at a record high and the S&P 500 also advanced as money rotated back into growth and technology shares. Bond yields pulled back, a sign that traders were reassessing inflation pressure as the prospect of easier energy flows lowered the near-term risk of another oil-driven price spike.

The market reaction turned on the Strait of Hormuz, which handles about 20% of the world’s daily oil traffic and roughly 20% of global seaborne energy trade. Any reopening matters far beyond the Middle East: if tankers can move more freely, gasoline costs can ease, headline inflation can cool, and the case for Federal Reserve rate cuts can look more plausible to investors who have been waiting for signs that price pressures are fading.

But the relief rally came with a warning label. Reuters reported that the agreement was only a preliminary framework, not a final settlement, and that the fate of Iran’s nuclear program was still left to further negotiations. The deal was expected to be formally signed in Switzerland on Friday, and market participants were still watching whether the ceasefire would hold and whether shipping routes could actually be restored without disruption.

That caution matters because physical recovery in the strait may lag the headlines. Clearing mines and restoring safe transit could take weeks, and one estimate put the minesweeping and underwater-drone effort at 40 to 50 days before shipping, insurance, and oil flows normalize. Morgan Stanley responded by cutting its oil-price forecasts, saying the agreement could revive regional output and increase supply, a shift that would keep pressure on energy stocks even as it offers some relief to consumers at the pump and to portfolios exposed to broader inflation risk.