Dow Jumps More Than 1,100 Points and Oil Plunges on Iran Ceasefire

Stocks surged and oil prices tumbled Wednesday as investors bet that the two-week ceasefire between the U.S. and Iran would hold long enough to reopen the Strait of Hormuz. The Dow Jones Industrial Average rose by more than 1,100 points during the session, according to the Associated Press, carried by PBS News, and CBS News put its gain at 1,325 points, or 2.9 percent, to close at 47,910.

The S&P 500 climbed 2.5 percent to 6,783, and the Nasdaq composite rose 2.8 percent, CBS News reported. The AP’s version of the story put the S&P 500’s rise at 2.1 percent and the Nasdaq’s at 2.3 percent, and said stocks remained below their levels before the war.

Oil fell the most. U.S. crude dropped more than 16 percent, to about $94 a barrel by the AP’s tally, and CBS News said both West Texas Intermediate and Brent traded around $96 in the afternoon, below $100. The AP put Brent at $94.75 and noted it was still well above its pre-war level of roughly $70.

Markets abroad followed. The AP reported that South Korea’s Kospi jumped 6.9 percent, Japan’s Nikkei 225 rose 5.4 percent and Germany’s DAX gained 5.1 percent. Airlines and cruise lines, which are sensitive to fuel costs, led the rebound in the United States: United Airlines rose 7.9 percent, Carnival 9.6 percent and Delta Air Lines 4.2 percent, the AP said. The yield on the 10-year Treasury eased to 4.29 percent from 4.33 percent, and traders now see about a 24 percent chance that the Federal Reserve resumes cutting interest rates this year, according to the AP.

Analysts framed the move as relief rather than resolution. Nigel Green, chief executive of deVere Group, said “markets have been primed for this moment,” and that removing part of the threat lets money flow back into stocks quickly, CBS News reported. TD Securities analysts questioned whether tankers would return to the strait given that it is unclear the ceasefire will last past two weeks, CBS News said. An AP strategist said there is “a reason to be optimistic, but it is still too early to tell.”

The truce was already under strain. CBS News reported that Iranian news outlets said Tehran was suspending tanker traffic through the strait and considering leaving the ceasefire after Israel continued strikes in Lebanon, while White House press secretary Karoline Leavitt called reports that the strait had closed “false,” citing increased traffic. The AP, for its part, reported that Iran closed the strait again that Wednesday and noted reports of drone and missile strikes. Oil ticked higher at midday on the reports, CBS News said.

For drivers, relief at the pump will lag the crude price. CBS News said economists had warned gasoline could rise past $5 a gallon if the strait stayed closed through mid-April, a risk the ceasefire eases but does not remove.