Key facts
- US and Iran have reached a preliminary agreement to end the Middle East war and reopen the Strait of Hormuz.
- Crude oil prices fell 5% to their lowest level since March.
- Airline and cruise stocks rose, while oil major shares declined.
- The Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all saw significant gains.
- The CBOE Volatility Index dropped to a more than one-week low.
- Micron shares soared 9.2%, and the semiconductor index hit a record high.
Wall Street's main indexes rose on Monday, with the Dow touching an intraday high after the United States and Iran struck a preliminary agreement to end the Middle East war and reopen the Strait of Hormuz, leading to a sharp fall in crude prices. The deal framework, however, did not address key issues such as Tehran's nuclear program and the Israel-Lebanon conflict. The pact is expected to be formally signed in Switzerland on Friday.
Crude prices plummeted 5% following the news and hit their lowest level since March, aiding shares of energy-sensitive airline and cruise stocks and hurting energy shares. United Airlines rose 5.4%, while Delta Air Lines and American Airlines added 2.2% and 4.4%, respectively. Norwegian Cruise and Carnival Corp advanced about 4% each. Shares of oil majors Exxon Mobil and Chevron fell almost 4% each. The S&P 500 energy index was down 3.4%.
The CBOE Volatility Index, Wall Street's fear gauge, slipped to a more than one-week low at 16.35 points. The three main indexes were on track for a third consecutive session of gains, recovering after geopolitical tensions and a pullback in AI-related stocks halted Wall Street's record climb. Memory chipmakers were at record highs, with Micron soaring 9.2% after multiple brokerages raised its price targets. The Philadelphia SE Semiconductor index hit a record high and rose 4.5%, with chip giant Nvidia up 3%. Seven of the 11 major S&P 500 sectors were in the green, with the S&P 500 tech index leading the advance with a 3.1% gain.
A resumption of oil flows from the Middle East and easing crude prices could give the U.S. Federal Reserve room to hold interest rates steady instead of raising borrowing costs. Traders expect the Federal Reserve to leave interest rates unchanged this week, but have pared back expectations for a 25-basis-point hike by the end of the year to 70%, from fully priced in the previous week.
At 11:24 a.m. ET, the Dow Jones Industrial Average rose 647.45 points, or 1.26%, to 51,849.71, the S&P 500 gained 128.90 points, or 1.73%, to 7,560.36, and the Nasdaq Composite added 694.46 points, or 2.69%, to 26,583.30. SpaceX's shares were up almost 8% after the Elon Musk-led firm ended its blockbuster IPO with a more than $2 trillion valuation. Markets were relieved by the smooth trading during its landmark Nasdaq launch. Fox tumbled 16.7% after the company said it would buy Roku in a $22 billion deal.