Markets rally on ceasefire

Stocks jumped because traders stopped pricing in an oil shock and started pricing in a pause. On April 8, the Dow Jones Industrial Average rose about 1,325 points, the Standard & Poor’s 500 gained about 2.5%, and the Nasdaq Composite climbed about 2.8% after Washington and Tehran announced a two-week ceasefire. (abcnews.com) The other half of the move was oil. United States crude fell to about $92.92 a barrel and Brent crude dropped to about $91.68 after fears eased that the Strait of Hormuz would stay shut. (apnews.com) That narrow waterway matters because around 20 million barrels of oil a day moved through it in 2024, which the United States Energy Information Administration says was about 20% of global petroleum liquids consumption. It also carried about one-fifth of global liquefied natural gas trade. (eia.gov) So when the ceasefire said Iran would reopen the strait for two weeks, markets treated it like a fire alarm being switched off, at least for now. Reuters reported stock index futures jumped more than 2% across the board as crude fell on expectations that energy supplies could resume. (usnews.com) (kitco.com) The rally was so large because investors had spent weeks hiding in safer trades. One strategist told CBS News that positioning had turned defensive, volatility was high, and energy prices were reflecting worst-case assumptions before the ceasefire headline hit. (cbsnews.com) Technology shares helped lead the rebound because lower oil prices can cool inflation fears and make it easier for investors to own fast-growing companies again. Reuters said Tesla, Nvidia, and Broadcom each rose between about 3% and 5% in premarket trading as the ceasefire news spread. (usatoday.com) But the relief trade came with a warning label. CNBC reported that even as stocks surged and oil dropped below $100, gold stayed firm and Treasury yields fell, which showed plenty of investors were still paying for protection. (cnbc.com) Shipping companies were cautious too. Reuters reported on April 8 that owners were still waiting for clear instructions on how vessels could pass safely, and Bloomberg reported the strait remained largely blocked as shipowners tried to work out whether transit was actually possible in practice. (usnews.com) (bloomberg.com) By April 9, the ceasefire was already looking fragile. The Associated Press reported disagreements over Lebanon and fresh signs that Iran’s Revolutionary Guard may have placed sea mines in the strait during the war. (apnews.com) That leaves Wall Street betting on a short sentence with a lot packed into it: two weeks. If tankers move, oil stays lower, and the truce holds past mid-April, the rebound can stick; if the route clogs again or the fighting resumes, the same market that added roughly $1.5 trillion in a day can start taking it back just as fast. (fortune.com) (kpmg.com)