U.S. stocks rallied and oil prices plunged below $100 per barrel on Wednesday as a temporary ceasefire in the Iran war eased fears of a prolonged energy shock that has rattled markets for more than five weeks.

The Dow Jones Industrial Average surged 1,325 points, or 2.9%, to close at 47,910. The S&P 500 jumped 166 points, or 2.5%, to close at 6,783, while the tech-heavy Nasdaq Composite rose 2.8%.

"Markets have been primed for this moment," Nigel Green, CEO of the financial firm deVere Group, said in an email Wednesday morning. "Positioning had become defensive, volatility was elevated and energy prices were reflecting worst-case assumptions."

"A pause, even a temporary one, releases that pressure very quickly," he added.

The market rally came after President Trump announced a ceasefire deal with Iran on Tuesday night on Truth Social, which he said was contingent on the reopening of the Strait of Hormuz. Iran also released a statement acknowledging the deal, which it said includes "continued Iranian control over the Strait of Hormuz."

Mr. Trump had previously given Iran until 8 p.m. Eastern Tuesday to agree to a deal to reopen the Strait of Hormuz, threatening to destroy all of the country's power plants and bridges if it did not meet the deadline.

Movement in the Strait
MarineTraffic, a maritime monitoring service, said Wednesday morning on X that there were "early signs" of vessel movement through the waterway following the ceasefire announcement.

However, later in the day, Iranian news outlets reported that Tehran is suspending tanker traffic in the strait and considering pulling out of the ceasefire agreement after Israel continued to strike Lebanon.

During a briefing with reporters on Wednesday, White House Press Secretary Karoline Leavitt said reports saying the strait has been closed are "false."

"We have seen an uptick of traffic in the Strait today. And I will reiterate the president's expectation and demand that the Strait of Hormuz is reopened immediately, quickly and safely," she said.

The Iranian news reports didn't appear to weigh heavily on markets. Oil prices, however, ticked back up slightly midday. By Wednesday afternoon, the U.S. benchmark, West Texas Intermediate, and the international benchmark, Brent crude, were both trading around $96 a barrel. Oil prices remain well above their pre-war levels.

Investors have been preparing for the possibility that the Strait could remain closed through at least mid-April, which economists warned could push gasoline prices past $5 a gallon and put upward pressure on energy costs.

"Investors were bracing for escalation that could have choked off a fifth of global oil supply," Green said. "Remove even part of that threat and capital flows back into equities at speed."

Gas prices over time
On Apr 09, 2026, the average cost of gas nationwide was $4.17 per gallon. That is $0 lower than the day before, $0.69 higher than a month ago and $0.93 higher than a year ago.

Still, it's unclear how shipping activity will unfold in the coming weeks, given the ceasefire is set to extend for just two weeks, TD Securities analysts said Wednesday in a research note.

"We question the appetite for tankers to begin to move back into the Strait for as long as it is unclear this will extend beyond two weeks," they said.

Source