NEW YORK — U.S. stock markets rallied Monday as oil prices fell sharply following the announcement of a ceasefire agreement between the United States and Iran that includes reopening the Strait of Hormuz.
The S&P 500 rose about 1.3 percent, the Dow Jones Industrial Average climbed roughly 1.2 percent, and the Nasdaq Composite advanced more than 2 percent in morning trading, according to market data. Brent crude oil futures dropped around 4-5 percent to near $83 per barrel.
President Donald Trump announced the deal late Sunday on Truth Social. "The Deal with the Islamic Republic of Iran is now complete," he wrote. "I hereby fully authorize the toll free opening of the Strait of Hormuz, and, simultaneously herewith, authorize the immediate removal of the United States Naval blockade. Ships of the World, start your engines. Let the oil flow!"
The agreement follows months of conflict that disrupted shipping through the strategic waterway, a critical route for global oil exports. Details of the full ceasefire framework, including specific implementation timelines and commitments regarding Iran's nuclear program, remain unclear. Pakistani mediators played a key role in the talks.
Iranian officials confirmed elements of the agreement, though full terms were not immediately released. A formal signing is expected in the coming days.
The market reaction reflected investor relief over potential restoration of energy supply flows and reduced geopolitical risk. Energy stocks and shares in companies sensitive to oil prices saw mixed movements, while broader indices gained on expectations of lower input costs for businesses and consumers.
U.S. stock futures had already climbed overnight following the initial announcement. Oil prices eased as traders anticipated increased crude shipments through the Strait of Hormuz. No immediate detailed comment was available from Israeli officials on the deal.
Trading volume was elevated as Wall Street responded to the weekend developments. The rally extended gains seen in Asian markets earlier in the session, where indices also rose on the news.
The ceasefire marks the latest diplomatic effort to de-escalate hostilities that escalated earlier in 2026. U.S. officials described the agreement as a step toward stabilizing the region, while Iranian sources emphasized commitments to ending the naval blockade.
Markets are expected to continue monitoring developments as more details on the ceasefire's implementation emerge in the coming days.
