Stocks jumped Monday to start the holiday-shortened trading week after President Donald Trump announced that the United States and Iran had reached an agreement to end the war.
The Dow Jones Industrial Average climbed 516 points, or 1%, and hit a new all-time intraday high during the session.
The S&P 500 rose 1.5%, while the Nasdaq Composite surged 2.3% as investors cheered the apparent breakthrough.
SpaceX shares also jumped 8% after soaring 19% in the company’s public market debut Friday.
Brian Mulberry, chief market strategist at Zacks Investment Management, said the market action looked more stable than expected.
“It seems to be much more orderly than what I expected, and that’s not a bad thing,” said Brian Mulberry, chief market strategist at Zacks Investment Management. “This is not some type of a meme stock right out of the gate, that it actually is people adding it and holding it in their portfolio, not trying to turn it over.”
Trump said late Sunday on social media that a deal with Iran was “now complete.”
Pakistan Prime Minister Shehbaz Sharif said the memorandum of understanding will be signed Friday in Switzerland.
The announcement followed a tense exchange of fire between Israel and Iranian-backed Hezbollah in Lebanon that had raised fresh doubts over whether the agreement would make it across the finish line.
Donald Trump also said he authorized the reopening of the Strait of Hormuz, the key oil passageway that had become a major flashpoint during the conflict.
The move sent oil prices tumbling.
U.S. crude was last down 5% to about $80 per barrel.
Vice President JD Vance told CNBC on Monday that he expects the strait is “going to be opened in a toll-free way for the long term.”
Lower crude prices fueled optimism that inflation pressure could ease, giving the Federal Reserve more room to hold interest rates steady.
Mulberry said it may take a “little bit longer” for prices to fall on refined products such as jet fuel, but said crude dropping to $80 sends a strong signal ahead of this week’s Federal Open Market Committee meeting.
He said the decline is “a strong signal, given that this is an FOMC week, that we don’t need to raise rates [and] that the price pressure should alleviate relatively quickly.”
Fed funds futures showed a more than 98% chance that the Fed will leave rates unchanged, according to CME’s FedWatch tool.
The reopening trade also caught fire after Trump’s Strait of Hormuz announcement.
Shares of United Airlines rose 3%, while Delta Air Lines gained 1.5%.
Cruise stocks also moved higher, with Royal Caribbean Group climbing more than 4% and Carnival Corporation rising more than 3%.
The market rally reflected a simple calculation from investors: less war risk, lower oil prices and a White House claiming a major diplomatic win.
After weeks of turmoil in the Middle East, Wall Street appeared ready to bet that Trump’s Iran deal could cool the crisis and keep the economy moving.
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