U.S. Stocks jumped on Friday after Iran declared the Strait of Hormuz open for commercial shipping following a ceasefire between Israel and Lebanon, with the Dow Jones Industrial Average rising 916 points, or 1.9%, to close near 49,000.
The S&P 500 crossed 7,100 for the first time, gaining 1.1%, while the Nasdaq Composite added 1.3% and the Russell 2000 small-cap index rose 2.5%, all hitting fresh intraday highs. The rally came as oil prices reversed course, with Brent crude falling 9% to trade above $90 a barrel and West Texas Intermediate dropping 10% to just over $84 a barrel, reflecting eased fears of supply disruption through the critical waterway.
Iran’s foreign minister announced the strait’s opening in a post on X, stating passage would remain open for the duration of the Lebanon-Israel ceasefire on a coordinated route already communicated by Iranian maritime authorities. The declaration followed President Trump’s statement that Israeli and Lebanese leaders had agreed to a 10-day truce effective at 5 p.m. ET on Thursday, which he said should pave the way for broader U.S.-Iran de-escalation.
Trump later thanked Iran on Truth Social for keeping the strait open and asserted that Tehran had agreed never to close the waterway again, while maintaining that the U.S. Naval blockade of Iranian ports would remain in full force until a peace agreement is reached. He added that negotiations should proceed quickly since most points were already settled.
Still, Iran’s Tasnim news agency cautioned that access might be restricted, reporting that vessels tied to hostile nations would not be permitted and that the strait could be shut again if the U.S. Blockade continues. It likewise noted uncertainty over whether ships would face tolls for transit, leaving commercial shippers wary of potential hidden costs or selective enforcement.
Stocks in sectors sensitive to Hormuz stability reacted strongly, with Boeing shares up 3% and Royal Caribbean gaining 8%, while Amazon and Airbnb also advanced. Anthony Saglimbene, chief market strategist at Ameriprise Financial, said investors were moving past worst-case scenarios and pricing in a path toward sustained openness, provided the ceasefire holds and diplomatic momentum continues.
Earlier in the week, oil futures had risen amid escalation fears, with Brent gaining 3.4% and WTI adding 2.3% on Thursday as markets priced in the risk of prolonged conflict. The sharp reversal on Friday underscored how quickly sentiment can shift when geopolitical flashpoints appear to cool, even temporarily.
Why did oil prices fall despite the ceasefire being only temporary?
Markets reacted to the reduced immediate risk of a full closure of the Strait of Hormuz, which had been a major concern amid fears that Iran might shut the waterway in retaliation. Even a temporary opening lowers near-term supply disruption premiums, prompting traders to unwind positions built on worst-case assumptions.
Can the U.S. Maintain its naval blockade of Iran while claiming the strait is open for others?
The U.S. Has said its blockade of Iranian ports will remain in full force until a peace agreement is reached, which creates a potential contradiction with Iran’s claim of open passage. However, the blockade targets Iranian vessels and ports specifically, not third-party commercial shipping, so the U.S. Position is that it does not violate freedom of navigation for neutral ships.
