Stock Markets Notch Record Gains as Crude Oil Prices Decline Following Strait of Hormuz Reopening

Market Rally Continues as Iran Opens Strait of Hormuz

The benchmark S&P 500 and the tech-heavy Nasdaq Composite each marked their third record close in a row on Friday, while the blue-chip Dow Jones Industrial Average finished at its highest level since late February. This rally came as investors reacted to Iran's decision to open the Strait of Hormuz and expressed optimism that a deal could be reached with the United States to end the war.

Iran's Foreign Minister Abbas Araqchi announced on X that commercial vessels are now able to pass through the Strait of Hormuz after a ceasefire agreement in Lebanon. This news followed U.S. President Donald Trump's statement that talks between Tehran and Washington could take place this weekend, with the possibility of securing a peace agreement to end the Iran war. The war has left thousands dead since the U.S. and Israel launched joint strikes on Iran on February 28.

Despite some uncertainty over the logistics of shipping, U.S. crude oil prices plummeted by over 11%, alleviating inflation concerns. The Strait of Hormuz is a vital waterway for global energy transportation. Analysts believe that the potential for a final deal between the U.S. and Iran is enough to justify the market's optimism.

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Market Performance

The Nasdaq Composite gained 365.78 points, or 1.52%, to 24,468.48, marking its 13th consecutive advance. This is the longest winning streak since 1992. The Dow Jones Industrial Average rose 868.71 points, or 1.79%, to 49,447.43, while the S&P 500 gained 84.78 points, or 1.20%, to 7,126.06.

Sector Performance

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

The energy sector was the biggest loser, ending down 2.9%, with Exxon Mobil and Chevron contributing to the benchmark's second and third biggest drags on the day. The consumer discretionary sector was the biggest gainer, finishing up just under 2%, with cruise operators leading its advances. Royal Caribbean jumped 7.3%, while Carnival rose 7%.

Despite the market's optimism, some analysts cautioned that logistical challenges remain for shippers. Ship operators still face astronomical war-risk insurance premiums, potential mine hazards, and uncertainty about enforcement.

The S&P 500's biggest drag was from Netflix, which tumbled 9.7% after forecasting current-quarter earnings below expectations. The company also announced the exit of co-founder and longtime Chairman Reed Hastings, ending a 29-year tenure. Alcoa shares ended down 6.8% after the aluminum producer reported first-quarter profit and revenue below analysts' estimates, citing elevated costs and softening demand.

Advancing issues outnumbered decliners by a 4.03-to-1 ratio on the New York Stock Exchange, where there were 623 new highs and 46 new lows. On the Nasdaq, 3,685 stocks rose and 1,183 fell as advancing issues outnumbered decliners by a 3.11-to-1 ratio. The S&P 500 posted 49 new 52-week highs and no new lows. Volume was relatively strong on U.S. exchanges, with 20.29 billion shares changing hands, compared with the 19.12 billion moving average for the last 20 sessions.