US stocks surged on Friday, with major indexes hitting fresh records as investors cheered Iran’s decision to reopen the Strait of Hormuz and growing optimism around a potential end to the Middle East conflict.
The Dow Jones Industrial Average jumped 869 points, or 1.8%, while the S&P 500 gained 1.2% to cross the 7,100 level for the first time. The Nasdaq Composite rose 1.5%, with both indexes touching new all-time intraday highs.
Hormuz reopening fuels rally
Investor sentiment was lifted after Iran confirmed that the Strait of Hormuz would remain open to commercial shipping during a 10-day ceasefire between Israel and Lebanon.
In a post on X, Iranian Foreign Minister Seyed Abbas Araghchi wrote, “In line with the ceasefire in Lebanon, the passage for all commercial vessels through Strait of Hormuz is declared completely open for the remaining period of ceasefire, on the coordinated route as already announced by Ports and Maritime Organisation of the Islamic Rep. of Iran.”
The announcement followed comments from US President Donald Trump, who said leaders of Israel and Lebanon had agreed to a ceasefire and suggested that talks with Iran could soon lead to a broader peace agreement.
“Most of the main points are finalized. It’ll go pretty quickly,” Trump said, adding in a separate post that the process “SHOULD GO VERY QUICKLY IN THAT MOST OF THE POINTS ARE ALREADY NEGOTIATED.”
Markets interpreted the developments as a sign that the conflict, which began in late February, could be nearing resolution.
Oil plunge eases inflation concerns
Oil prices dropped sharply following the announcement, as fears of supply disruptions eased. US West Texas Intermediate crude fell nearly 12% to settle at $83.85 per barrel, while Brent crude declined about 9% to $90.38.
The Strait of Hormuz is a critical route for global energy flows, and its reopening reduced concerns about inflationary pressures linked to rising fuel costs.
Lower energy prices also supported gains in small-cap stocks, which tend to be more sensitive to input costs.
Sector gains led by cyclicals
The rally was broad-based, with sectors sensitive to energy costs and economic growth leading gains. Consumer discretionary stocks outperformed, with cruise operators and airlines advancing sharply. Shares of companies such as Boeing and Royal Caribbean also moved higher.
At the same time, energy stocks lagged the broader market as oil prices declined, with major producers among the biggest drags on the S&P 500.
Despite the strong rally, some caution remains around the practical implications of reopening the Strait of Hormuz. Analysts noted that shipping challenges persist, including elevated war-risk insurance costs and potential safety concerns.
Even so, the broader market momentum remains intact, with all three major indexes on track for strong weekly gains as investors increasingly price in a path toward de-escalation and improved global economic conditions.
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