Oil prices retreated to levels seen earlier during the Iran conflict while U.S. stocks surged to another high on Friday, following Iran’s announcement that the Strait of Hormuz is now open for commercial oil tankers transporting oil from the Persian Gulf to global customers. The S&P 500 soared 1.2%, achieving a new peak and concluding a third consecutive week of significant gains, marking its lengthiest winning streak since Halloween. A smoother oil flow could alleviate the pressure on prices not only for fuel but also for groceries and various goods transported by vehicles.
The Dow Jones Industrial Average surged by up to 1,100 points before settling at an 868-point gain, representing a 1.8% increase, while the Nasdaq Composite rose by 1.5%. The Canadian S&P/TSX Composite Index closed with a 294.06-point increase at 34,346.29.
Since hitting a bottom in late March, the U.S. stock market has surged over 12% on hopes that the U.S. and Iran will avert a worst-case scenario for the global economy amidst the conflict. The potential reopening of the Strait of Hormuz, albeit possibly temporary, serves as a clear signal for optimism. President Donald Trump mentioned in a late Thursday speech that the conflict “should be ending pretty soon.”
Following Iran’s announcement on the social media platform X by Foreign Affairs Minister Abbas Araghchi declaring the strait fully open during a 10-day ceasefire in Lebanon, the price for a barrel of benchmark U.S. crude plummeted. U.S. oil dropped by 9.4% to $82.59 per barrel, while Brent crude, the global standard, declined by 9.1% to $90.38 per barrel.
Despite remaining above its pre-conflict level of $70, the decrease in oil prices indicates lingering caution in financial markets. Wall Street has witnessed fluctuating optimism, swiftly transitioning to doubt regarding a potential end to the conflict, leading to abrupt price swings across various assets.
While today’s news has elicited positive market reactions, uncertainties persist regarding the movement in the Strait. Carsten Brzeski, global head of macro at ING, expressed optimism about the news potentially alleviating oil prices and benefiting consumers. However, he raised concerns about the willingness of vessels to navigate through the Strait, suggesting a gradual uptake in traffic even if officially open.
Companies with substantial fuel expenses experienced notable gains as oil prices eased. United Airlines surged by 7.1%, with cruise ship operators like Royal Caribbean Group and Carnival also posting significant increases. Favorable earnings reports from major U.S. companies have further bolstered the stock market, with several financial firms surpassing analyst profit expectations for the beginning of 2026.
State Street and Fifth Third Bancorp both reported better-than-expected quarterly results, contributing to their respective stock gains. However, Netflix witnessed a 9.7% decline despite surpassing profit expectations, as it refrained from raising its revenue growth forecast for the year, potentially disappointing investors.
In international markets, European stock indexes surged following Iran’s Strait of Hormuz announcement, with France’s CAC 40 rising by 2.2% and Germany’s DAX by 2.3%. Asian markets, which closed prior to the announcement, experienced declines, with Japan’s Nikkei 225 falling by 1.8% and Hong Kong’s Hang Seng by 0.9%. Treasury yields eased in the bond market as falling oil prices alleviated inflation concerns, with the 10-year Treasury yield dropping to 4.24% from 4.32% late Thursday.
