Wall St indexes rally after Iran says Strait of Hormuz ‘completely open’

NEW YORK: The benchmark S&P 500 and the tech-heavy Nasdaq touched all-time highs on Friday, while the blue-chip Dow hit its highest level in over two months, as investors cheered Iran’s decision to open the Strait of Hormuz.

Iran’s Foreign Minister Abbas Araqchi said in a post on X that passage for all commercial vessels through the Strait of Hormuz was “completely open” for the remainder of the 10-day truce between Israeli forces and Iran-backed Hezbollah agreed to in Lebanon. This followed US President Donald Trump saying that Washington could soon secure a peace agreement to end the war with Iran.

With markets increasingly confident that an end to the war is near, oil prices slid over 11 percent, alleviating inflation concerns. The Strait of Hormuz is a vital waterway for global oil flows.

“The opening of the Strait of Hormuz is a critical step towards normalizing transit through the waterway. But the reopening is limited in scope,” said James Reilly, senior markets economist at Capital Economics.

“That all being said, this is a significant and necessary step towards potentially ending the war.”

The S&P 500 energy sector slipped 4.8 percent with Exxon Mobil and Chevron down 5.7 percent and 4.5 percent, respectively.

Airline stocks gained, with American Airlines and United Airlines jumping more than 7 percent. Cruise operators Carnival and Norwegian Cruise Line rose 8.7 percent and 7.5 percent, respectively.

The CBOE volatility index hit a two-month low and was last down 0.97 points at 16.97.

At 11:31 a.m. ET, the Dow Jones Industrial Average rose 958.20 points, or 1.97 percent, to 49,537.12, the S&P 500 gained 90.30 points, or 1.28 percent, to 7,131.58 and the Nasdaq Composite gained 391.43 points, or 1.62 percent, to 24,494.14.

All three indexes were cruising toward their third consecutive week of gains. The Nasdaq Composite was on course to extend its winning run to 13 days, its longest since January 1992.

The small-cap Russell 2000 hit its first intraday record high since the US-Iran conflict erupted.

Still, some analysts cautioned that logistical challenges remain for ships attempting to cross the Strait of Hormuz.

“Ship operators still face astronomical war-risk insurance premiums, potential mine hazards, and uncertainty about enforcement,” said Erik Bethel, general partner at maritime-focused investment firm Mare Liberum.

Netflix dropped 9.6 percent after forecasting current-quarter earnings below expectations. The slide comes as co-founder and longtime chairman Reed Hastings stepped down, ending a 29-year tenure.

Alcoa fell 7.9 percent after the aluminum producer reported first-quarter profit and revenue below analysts’ estimates, citing elevated costs and softening demand.