Stocks roared higher on Wednesday, after President Donald Trump announced a two-week ceasefire between the United States and Iran, bringing a pause to the war that started more than a month ago.
Official statements from Washington and Tehran, however, did not offer a clear picture of what the future of shipping traffic in the Strait of Hormuz would look like. Despite the unanswered questions and conflicting comments throughout the afternoon, markets had an overwhelmingly positive response to the news.
The S&P 500 closed up 2.5%. The Nasdaq Composite ended higher by 2.8%, the Dow jumped 1,325 points and the Russell 2000 surged 2.9%.
It was the Dow's single largest one-day percentage gain since April 2025.
Strategists on JPMorgan Chase's trading desk said the S&P 500 could rise even further "as euphoria returns to markets."
"Assuming that this is not a feint from any of the parties, the market is likely to treat this as a de facto end of the conflict despite the economic damage that is still coming across all regions," they wrote.
Other experts cautioned that investors and traders could be getting ahead of themselves.
"We are not out of the woods yet," Krishna Guha, Evercore vice chairman and head of economics, wrote in a memo Wednesday morning. "The ceasefire could fall apart. There will still be an initial inflation shock."
Not long after trading began on Wednesday, an Iranian semi-official news agency reported that traffic was suspended in the Strait of Hormuz in response to Israel’s attacks on Lebanon. The news did not slow down the drop in oil prices, however.
Nor did an announcement from the speaker of Iran's parliament, who said the U.S. had violated the ceasefire in a post on X around 2:15 p.m. ET.
U.S. crude oil closed down 16.4% to $94.41 per barrel, its largest one-day decline since 2020.
International Brent crude oil also tumbled 13.3% to $94.75.
But whether oil tankers will decide to transit the strait — even if Iran says some are being granted safe passage — is far from assured.
The decision rests in part on whether the ships can secure maritime insurance, a crucial financial hedge for valuable cargo on the high seas.
On Wednesday, only four ships passed through the Strait, according to S&P Global Market Intelligence. That was the lowest number of the week so far, after 11 ships passed through on Tuesday and nine passed on Monday. However, it’s possible that the count is incomplete due to ships turning off their transponders in order to try to transit the critical waterway undetected.
“Time will tell whether it is a pause or a peace but, in the meantime, it is highly unlikely that trade into the Gulf will simply resume,” wrote Neil Roberts, head of the Lloyd’s Market Association.
“The region remains at heightened risk with none of the underlying tensions resolved," he added. The Lloyd’s of London market is the global hub for maritime and shipping insurance.
But while oil prices may be falling, gas prices will take longer to reflect the moves.
In some parts of the United States, “these big drops today don’t get locked in until this evening,” GasBuddy analyst Patrick De Haan wrote on X. He predicted that “prices may begin to ease” in the next 36 hours, and the cost of a gallon of gas could fall 1 to 3 cents per day by the weekend.
Since the war started, unleaded gas prices have risen more than $1.20 per gallon, from $2.94 to $4.16 as of Wednesday morning, according to GasBuddy data.
On Wednesday afternoon, the Fed released the minutes from its most recent meeting on March 17 and 18. Fed officials warned that a “protracted conflict in the Middle East could lead to a further softening in labor market conditions, which could warrant additional rate cuts, as substantially higher oil prices could reduce households’ purchasing power,” the newly released minutes showed.
Jet fuel prices have also been soaring. Since the U.S. and Israel launched strikes on Iran on Feb. 28, the costs have nearly doubled, according to data from industry monitor Argus.
Delta Air Lines said Wednesday that it expected to spend an additional $2 billion more on jet fuel in the current quarter than it had previously planned. It also said it would cut its growth plans to stem rising costs.
Exxon Mobil also said Wednesday that about 6% of its global output had been lost as a result of the war. It said two liquefied natural gas facilities in which the company holds an interest were impacted by "attacks."
"Public reports indicate the damage will take a prolonged period to repair," Exxon said in a statement. "Pending an on-site evaluation, we are unable to comment on the length of time before the two trains return to normal operations." A train is a processing unit for liquefied natural gas.
Meanwhile, U.S. Treasury yields of all maturities traded steeply lower on the news of a short-term ceasefire. The 10-year yield, which influences consumer mortgage rates, dropped sharply to 4.2%. Just weeks ago, it was trading at nearly 4.4%.
As a consequence, the average 30-year mortgage rate trended lower to 6.38% on Wednesday, down from 6.44% on Tuesday.
Stocks around the world also rallied. Japan's Nikkei 225 soared more than 5%, Korea's Kospi index surged 7% and the Hang Seng index in Hong Kong rose 3%.
Europe's Stoxx 600 surged 3.8%. Flagship indexes in France, Italy and the United Kingdom jumped more than 2.5%. Germany's DAX stock index jumped more than 5%.
