Oil prices plummeted Friday after Iran announced the Strait of Hormuz is open again for commercial shipping, sending U.S. stocks to record highs and suggesting the grinding Iran war may be nearing an end. The S&P 500 jumped 1.2% to an all-time high, the Dow surged 1.8%, and the Nasdaq climbed 1.5%. Oil futures for U.S. crude dropped 9.4% to settle at $82.59 per barrel, while Brent crude fell 9.1% to $90.38.
The oil-price decline could ease inflation pressures across the economy, potentially prompting the Federal Reserve to cut interest rates and lowering mortgage and credit-card costs for consumers.
Iran Opens the Strait
Iran’s Foreign Minister Abbas Araghchi announced Friday that passage for commercial vessels through the strategic waterway “is declared completely open.” His statement came as a ceasefire appears to be holding in Lebanon, another front of the wider conflict.
The Strait of Hormuz moves roughly one-third of the world’s traded oil. Its closure had sent energy prices soaring since the Iran war began months ago, with ripple effects across transportation, grocery prices, and inflation-sensitive sectors throughout the economy.
The stock market rally marks the third straight week of significant gains, capitalizing on hopes that the United States and Iran might reach a settlement. Since hitting a low point in late March, the S&P 500 has jumped more than 12%.
Still, caution remains embedded in financial markets. Oil prices remain above $70 per barrel, where they traded before the war, signaling investor wariness about whether the ceasefire will hold or spread to other conflict zones.
President Trump said late Thursday that the war “should be ending pretty soon” and that “most of the points are already negotiated.” He added that the U.S. Navy blockade of Iranian ports would remain “in full force” until both sides reach a final agreement.
Wall Street’s Winners
Companies with high fuel costs led Wall Street’s gains. United Airlines rose 7.1%, and Southwest Airlines climbed 5.1%. The International Energy Agency had warned earlier this week that Europe has roughly six weeks of jet fuel supplies remaining.
Cruise operators, which consume large amounts of fuel, also surged. Royal Caribbean Group gained 7.3%, and Carnival rose 7%. Housing and auto companies benefited from expectations of lower fuel costs reducing inflation pressure. Builders FirstSource rose 5.5%, homebuilder PulteGroup gained 5%, and online car retailer Carvana climbed 7%.
Lower energy prices could allow the Federal Reserve to resume interest-rate cuts to support the economy. Treasury yields fell Friday, with the 10-year yield dropping to 4.24% from 4.32% the previous day. Lower yields typically bring down mortgage rates and other borrowing costs for consumers and businesses.
Financial companies reported stronger earnings for the first quarter. State Street rose 2.5% and Fifth Third Bancorp added 1.7% after both beat profit expectations.
Netflix fell 9.7% despite reporting better-than-expected profit. The streaming company declined to raise its full-year revenue forecast, disappointing some investors. Netflix said cofounder Reed Hastings will step down from the company’s board in June when his term expires.
Market Close and Global Reaction
The S&P 500 closed at 7,126.06, the Dow at 49,447.43, and the Nasdaq at 24,468.48. In Europe, France’s CAC 40 jumped 2% and Germany’s DAX rose 2.3%. In Asia, Japan’s Nikkei 225 lost 1.8% and Hong Kong’s Hang Seng fell 0.9%, as trading occurred before the Strait announcement.