Stocks jump on calmer Middle East

U.S. stocks surged on Friday, April 17, after Iran said the Strait of Hormuz was open to commercial shipping and a ceasefire between Israel and Lebanon took hold. (cnbc.com) The Dow Jones Industrial Average jumped 868.71 points, or 1.79%, to 49,447.43. The S&P 500 rose 1.2% to 7,126.06, and the Nasdaq Composite gained 1.52% to 24,468.48; both closed at fresh records, while the Russell 2000 hit a new high in early trading and finished up more than 2%. (cnbc.com) Oil moved the other way. U.S. West Texas Intermediate crude fell nearly 12% to $83.85 a barrel, and Brent crude dropped 9% to $90.38 as traders cut bets on a supply shock from the Gulf. (cnbc.com; cnbc.com) The market reaction centered on one waterway. Roughly 20% of the world’s oil and natural gas moves through the Strait of Hormuz, and investors had spent weeks pricing in the risk that fighting around Iran could keep tankers out and push fuel costs higher. (cnbc.com) That fear had driven a sharp selloff earlier in the conflict. The S&P 500 fell about 8% from the start of the Iran war on February 28 to a low on March 30 before rebounding; by April 17 it had moved above 7,100 for the first time. (cnbc.com; cnbc.com) Friday’s gains followed a string of relief rallies tied to ceasefire headlines. On April 8, after President Donald Trump said he would suspend planned attacks on Iran for two weeks, the Dow rose 1,325.46 points, the S&P 500 gained 2.51%, and West Texas Intermediate crude dropped more than 16% in one session. (cnbc.com) Bond markets moved in the same direction as stocks and oil. The 10-year Treasury yield fell more than 6 basis points to 4.244% on April 17, a sign that traders expected less pressure on inflation if energy shipments kept moving. (cnbc.com) Investors were still not treating the conflict as settled. CNBC reported that Iran’s Tasnim news agency said ships and cargoes linked to hostile nations would not be allowed through, and Trump said the U.S. Navy blockade of Iranian ports would remain in force until a broader peace agreement was reached. (cnbc.com) The rally spread beyond the major indexes into companies most exposed to fuel costs and travel disruption. Royal Caribbean shares rose 7% on April 17, while Boeing gained 2% as traders bought back sectors that had been hit during the oil spike. (cnbc.com) By the closing bell, Wall Street was trading less on the fighting itself than on whether oil could keep falling. As long as the strait stays open, lower crude prices give investors a reason to keep betting that the war’s biggest economic shock is passing. (cnbc.com; cnbc.com)