Stocks surge, oil tumbles after Iran says Strait of Hormuz open

Oil cracked first, and stocks followed. After Iran said the Strait of Hormuz was “completely open” following a ceasefire announcement between Israel and Lebanon, crude prices tumbled more than 10% to below $84 a barrel, easing one of the market’s biggest fear points almost instantly. By the close, investors had turned that relief into a broad rally on Wall Street, with the S&P 500 up 1.2% to 7,126.06, its first close above 7,100.

The Nasdaq Composite climbed 1.52% to 24,468.48 for its 13th straight gain, its longest winning streak since 1992, while the Dow Jones Industrial Average jumped 868.71 points, or 1.79%, to 49,447.43. The Russell 2000 also hit a fresh high and rose more than 2%, a sign that traders were not just buying megacap technology stocks but also moving into smaller companies that tend to benefit when investors grow less defensive.

The move in oil mattered because it goes straight to household budgets. A retreat in crude can eventually filter into gasoline prices, freight costs and broader inflation readings, all of which influence how much room the Federal Reserve has to cut rates later this year. Christopher Waller said the Middle East conflict could push inflation higher in the near term and make policy harder to manage, but a swift end to the fighting could leave the door open to rate cuts later in 2026. That tension, between hotter near-term prices and a calmer longer-term outlook, is exactly what markets are now trying to price.

Still, Wall Street’s reaction looked at least as much like relief from the worst-case scenario as confidence in a lasting peace. Donald Trump said the U.S. blockade on Iranian ports would remain in place even after Tehran’s announcement, keeping a political and military risk premium alive. Traders are also watching whether the Strait is truly fully open to commercial shipping, or whether vessels continue to face disruptions despite the headline. For now, investors have taken the sharp drop in oil as a signal that the immediate threat has eased, and retirement accounts, energy bills and inflation expectations all moved a little less ominously with it.