U.S. stock markets are surging higher and the price of crude oil is plunging after U.S. President Donald Trump said America and Iran have held productive talks and he is halting strikes on the Middle Eastern nation for at least five days.
The Dow Jones Industrial Average surged 1,130 points, or 2.5%, immediately after Trump’s comments, while the benchmark S&P 500 index gained 2.3%, and the technology-laden Nasdaq (NDAQ) jumped 2.2%.
Before Trump’s comments, U.S. markets were pointing to more losses following four down weeks for stocks as the war with Iran showed no signs of abating.
At the same time, crude oil prices tanked after Trump’s latest social media post, with West Texas Intermediate (WTI) crude oil, the U.S. standard, falling 9% to $90 U.S. a barrel.
Brent crude oil, the international benchmark, suddenly dropped 13% to $97 U.S. a barrel.
Trump’s announcement came as the Iran war enters its fifth week. Trump had threatened over the weekend to attack Iran’s power plants.
However, while markets are welcoming Trump’s newest comments, the Strait of Hormuz — a key shipping route for 20% of the world’s crude oil and natural gas— isn’t yet reopened.
With the Strait of Hormuz remaining effectively closed, pressure on oil prices is likely to remain high in the near-term, say analysts.
Before this latest rebound, the Dow and Nasdaq indices were each threatening to fall into correction territory marked by a 10% decline from recent highs.
The small cap Russell 2000 Index is already in a correction, while safe haven precious metal gold declined 10% last week and activity in the bond market remains largely muted.
The Dow and Nasdaq indices each fell 2% last week, while the S&P 500 lost 1.5% as the Iran war drags on. For the blue-chip Dow, it was its first four-week losing streak since 2023.
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