Wall Street surged to fresh record levels on Friday, buoyed by easing geopolitical tensions in West Asia after US President Donald Trump signalled that the Strait of Hormuz would remain open to global shipping.
Markets rally across the board
All major US benchmarks closed at or near all-time highs:
- S&P 500 rose 1.2%, marking its third consecutive record close
- Nasdaq Composite gained 1.5%, also logging a third straight record finish
- Dow Jones Industrial Average jumped 868 points (1.8%), after rising as much as 1,100 points during the session
The rally extended to smaller companies as well, with the Russell 2000 outperforming large-cap peers to end at a record high.
Oil slump fuels optimism
Investor sentiment improved sharply after comments from Iranian Foreign Minister Abbas Araqchi indicating that the Strait of Hormuz would stay open during a temporary ceasefire.
The development triggered a steep drop in oil prices:
- Brent crude fell 9% to $90.38 per barrel
- US West Texas Intermediate dropped 11.45% to $83.85
Lower energy prices eased inflation concerns and boosted sectors sensitive to input costs, particularly small-cap stocks.
Sectoral shifts and stock movers
Energy companies such as Exxon Mobil and Chevron declined in line with falling crude prices.
In contrast, airline stocks including American Airlines and United Airlines rallied on expectations of lower fuel costs.
Streaming giant Netflix was a notable laggard, tumbling over 9% after issuing a weak growth outlook and announcing the departure of co-founder Reed Hastings as chairman.
Broader market momentum
The rally has been swift, with US equities climbing more than 12% since late March lows. Optimism has been driven by hopes that the US and Iran may avoid a worst-case economic fallout from the ongoing conflict.
Bond markets also reflected the shift in sentiment, with US Treasury yields falling as declining oil prices reduced inflationary pressures. The benchmark 10-year yield dropped to its lowest level since mid-March, while the 2-year yield—closely tied to Federal Reserve expectations—also moved lower.
Uncertainty lingers
Despite the rally, uncertainty remains. Conflicting signals emerged after Iranian officials later suggested the Strait may not be fully open, highlighting the fragile nature of the ceasefire.
For now, however, markets are reacting to the immediate relief in energy prices and the prospect of de-escalation, driving a strong risk-on sentiment across global equities.
