Stocks Rally on Ceasefire Relief, Oil Prices Increase as Truce is Put to the Test

Market Recap: Wall Street Advances Amid Ongoing Iran Conflict Tensions

New York, April 22 (Reuters) - Wall Street stocks made significant gains on Wednesday, following U.S. President Donald Trump's announcement of an extended ceasefire in the Iran war. The move came hours after Iran's Revolutionary Guards seized two cargo ships for maritime violations in the Strait of Hormuz, a crucial waterway through which approximately a fifth of the world's oil and liquefied natural gas (LNG) supplies pass.

Despite the energy shock and intense headlines, the macroeconomy, corporate fundamentals, and consumer spending remain strong. According to Bill Merz, head of capital markets research at U.S. Bank Wealth Management in Minneapolis, investors are taking a cautious stance, anticipating that the Strait of Hormuz will reopen before significant damage is inflicted on the global economy.

U.S. stocks, initially battered by the war, have since recovered fully, with the S&P 500 and the Nasdaq reaching all-time closing highs in recent sessions. However, geopolitical uncertainty lingers, and a prolonged period of elevated oil prices remains a threat. Approximately two-thirds of the S&P 500 companies that have reported quarterly earnings since April have voiced concerns about energy prices in their analyst conference calls.

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First-quarter earnings season is underway, with analysts estimating year-on-year S&P 500 earnings growth of 14.4% for the January-March period, according to the latest LSEG data. The Dow Jones Industrial Average rose 235.58 points, or 0.48%, to 49,384.72, while the S&P 500 rose 57.95 points, or 0.82%, to 7,121.98, and the Nasdaq Composite rose 326.49 points, or 1.35%, to 24,586.46.

European shares, however, ended lower for the third consecutive session, weighed down by the Middle East strife and corporate earnings assessments. Dozens of international firms have withdrawn guidance or signaled price hikes since the conflict began. MSCI's gauge of stocks across the globe rose 3.12 points, or 0.29%, to 1,069.58, while the pan-European STOXX 600 index fell 0.35%.

Oil prices jumped following the reports of attacks on container ships in the Strait of Hormuz, and got a further boost from a surprise drawdown in gasoline and distillate stocks in the U.S. U.S. crude rose 3.67% to settle at $92.96 per barrel, while Brent settled at $101.91 per barrel, up 3.48% on the day.

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Bargain hunters pushed gold prices higher after the precious metal hit a one-week low. Spot gold rose 0.44% to $4,732.61 an ounce, while U.S. gold futures rose 0.93% to $4,742.20 an ounce.

The dollar inched higher against the euro amid lingering geopolitical worries, with the dollar index rising 0.22% to 98.59. The euro fell 0.29% to $1.1708, while the dollar strengthened 0.06% against the Japanese yen to 159.46.