U.S. stocks closed sharply higher on Wednesday after a last-minute, two-week ceasefire agreement between the United States and Iran lifted investor sentiment.
All three major U.S. stock indexes surged at the opening bell, muscled higher by a broad relief rally after a deal brokered by Pakistan resulted in a two-week suspension of the war. The conflict, which began with joint U.S.-Israeli strikes on Iran on February 28, has sent world markets reeling, disrupted global oil supply and sparked fears of rising inflation. A senior Iranian official told Reuters that the crucial Strait of Hormuz, through which one-fifth of the world’s oil is shipped, could be reopened on Thursday or Friday ahead of peace talks if the countries agreed upon a framework for the ceasefire.
Economically sensitive Dow Transports .DJT touched an all-time high, while the Russell 2000 .RUT outperformed its larger-cap peers. The rally was not confined to U.S. indexes. European shares.STOXX rose 3.9%, while MSCI’s World index .MIWD00000PUS was up over 3%. Both indexes logged their biggest one-day percentage gains in a year.
The CBOE Market Volatility index .VIX, a barometer of investor anxiety, dipped to its lowest level since the beginning of the war. Front-month WTI CLc1 and Brent LCOc1 crude futures fell 16.4% and 13.3%, respectively, both settling below $100 per barrel.
Minutes from the U.S. Federal Reserve’s March meeting, released on Wednesday, showed a growing openness to rate hikes as policymakers raised their 2026 inflation outlook due to war-related oil shock.
According to preliminary data, the S&P 500 .SPX .SPX gained 166.63 points, or 2.52%, to end at 6,783.48 points, while the Nasdaq Composite .IXIC .IXIC gained 620.05 points, or 2.82%, to 22,637.90. The Dow Jones Industrial Average .DJI .DJI rose 1,329.56 points, or 2.85%, to 47,914.02. Sectors that have suffered a beating since the war began, including commercial airlines .SPCOMAIR .SPCOMAIR , travel and leisure-related stocks .SPCOMHOTL .SPCOMHOTL and homebuilders .SPCOMHOME .SPCOMHOME , enjoyed robust bouncebacks.
Delta Air Lines DAL.N DAL.N rose, despite its disappointing second-quarter profit forecast. The commercial air carrier declined to update its annual outlook due to uncertainties related to the Iran war. Delta peers Southwest Airlines LUV.N LUV.N and United Airlines UAL.O UAL.O also advanced. Cruise operators Carnival CCL.N CCL.N and Norwegian Cruise Line NCLH.N NCLH.N both notched robust gains. Levi Strauss LEVI.N LEVI.N jumped after the apparel maker raised its annual sales and profit forecasts.
Reporting by Stephen Culp in New York; Additional reporting by Johann M Cherian, Purvi Agarwal and Avinash P in Bengaluru; Editing by Matthew Lewis.
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