News of the Strait of Hormuz opening causes New York stock market to rise, oil prices stabilize and confirm

Iran announces that all merchant ships will be allowed to pass through the Strait of Hormuz during the ceasefire period. On the 17th, risk assets in the New York stock market regained risk appetite sentiment and showed a strong upward momentum. As concerns over disruptions to Middle Eastern energy supplies eased, investors focused on oil price stability and the potential easing of geopolitical tensions, with major indices advancing together and continuing to hit new record highs.

That day, the Dow Jones Industrial Average rose 868.71 points (1.79%) to close at 49,447.43 points. The S&P 500 index increased by 84.78 points (1.20%) to 7,126.06 points, breaking through the 7,100-point threshold for the first time; the Nasdaq Composite rose 365.78 points (1.52%) to close at 24,468.48 points. The S&P 500 and Nasdaq indices hit new all-time highs for three consecutive trading days, with the Nasdaq rising for 13 straight days, marking the longest streak of gains since 1992. The Russell 2000 index, which reflects the performance of economically sensitive stocks, also rose 2.11%, reaching a three-month high.

The core background for the market reaction is the Strait of Hormuz. This strait is a critical maritime passage for Middle Eastern crude oil and liquefied natural gas heading to global markets. Expectations of a potential blockade here often lead to soaring international oil prices and significant financial market volatility. Iranian Foreign Minister Abdollahian stated via X account that, given the ceasefire situation in Lebanon, all merchant ships will be allowed to navigate during the remaining ceasefire period. U.S. President Donald Trump also mentioned that Iran has agreed not to block the Strait of Hormuz anymore. This news has increased expectations that the U.S.-Iran peace negotiations, expected to restart this weekend, may make progress.

The energy market responded immediately. Brent crude oil futures for June delivery closed at $90.38 per barrel, down 9.1% from the previous trading day; U.S. West Texas Intermediate (WTI) crude futures for May delivery closed at $83.85 per barrel, plunging 11.5%. The decline in oil prices is directly positive for industries burdened by fuel costs. Royal Caribbean Cruises rose 7.34%, United Airlines increased 7.12%, and Southwest Airlines gained 5.09%. On the other hand, the drop in international oil prices is a factor weighing on earnings expectations for energy companies, leading to ExxonMobil falling 3.65% and Chevron dropping 2.21%. The Chicago Board Options Exchange Volatility Index, known as the fear index, which reflects market anxiety, briefly fell to 16.87 during the session, the lowest since February 11. In individual stocks, Netflix, despite exceeding market expectations in earnings, plummeted 9.72% due to the news that its co-founder Reed Hastings resigned as chairman.

However, some also point out that the market’s enthusiasm and the actual normalization of maritime shipping are still difficult to consider progressing at the same pace. According to Reuters, Erik Bette, a partner at marine specialist investment firm Mare Liberum, diagnosed that shipping companies still face extremely high war risk insurance premiums, potential threats from naval mines, and uncertainties over whether blockade measures will be effectively implemented. Ultimately, this rebound largely reflects expectations of a possible easing of geopolitical tensions in advance. The trend may continue depending on the progress of U.S.-Iran negotiations, the actual speed of ship resumption, and whether international oil prices stabilize. However, if the on-site risks are not fully eliminated, there remains a possibility of increased volatility.