Stock markets rallied worldwide Monday and oil prices eased after the United States and Iran reached a tentative deal to extend their ceasefire and reopen the Strait of Hormuz, a move aimed at restoring the global flow of crude after a war that has driven up costs for ordinary people. The S&P 500 rose 1.9% on hopes that the announcement of an Iran-U.S. agreement will mean a long-term fix to a conflict that has worsened inflation around the world.
Who Pays for the Deal
The immediate winners were not households or workers, but the markets that profit from every turn of the crisis. The Dow Jones Industrial Average was up 705 points, or 1.4%, as of 1:32 p.m. Eastern time, and the Nasdaq composite was 3% higher. Brent crude oil fell 4.8% to $83.14, back to where it was in early March. While that was still higher than its price of roughly $70 from before the war more than three months ago, it was lower than the $100-plus it cost just a few weeks ago.
The hope is that lower oil prices will take pressure off households and businesses, which have had to pay higher prices for everything from food to fuel to fertilizer because of the war with Iran. That is the hierarchy in plain view: decisions made at the top, costs pushed downward.
Iran confirmed the agreement but signaled its implementation would not start until it is signed, which Pakistan said would happen Friday in Switzerland. Broader negotiations on issues like Iran’s nuclear program are expected to continue over the next 60 days. That leaves opportunity for hiccups that could derail the agreement. Even if the deal reopens the Strait of Hormuz, it will take months for the energy industry to get back to full speed.
Wall Street’s Winners
On Wall Street, stocks of companies with big fuel bills were instant winners. United Airlines rose 4.7%, American Airlines climbed 3.3% and cruise operator Carnival rose 3.6%. Stocks of companies enmeshed in the artificial-intelligence industry also jumped. Micron Technology rallied 9.8%, Advanced Micro Devices rose 7.2% and Nvidia climbed 3.6%.
Nvidia’s gain was the strongest force pushing the S&P 500 upward because the AI chip company is Wall Street’s most valuable company. SpaceX, Elon Musk’s rocket company that also owns the AI company xAI, rose 14.2% in its second day of trading on Wall Street. Its successful debut on the Nasdaq suggested plenty of demand still exists among investors for AI. The market has given SpaceX a total value of more than $2.1 trillion, making it bigger than Exxon Mobil, Bank of America and Coca-Cola combined.
The spectacle is familiar: the apparatus of finance rewards the firms already positioned to extract value, while everyone else is told to wait for relief to trickle down through cheaper fuel and calmer headlines.
Central Banks, Traders, and the Same Old Levers
In the bond market, Treasury yields eased on hopes that lower oil prices will remove pressure on central banks worldwide to raise interest rates. The yield on the 10-year Treasury eased to 4.47% from 4.48% late Friday. The Fed will announce its latest decision on interest rates later this week, which will be the first under its new chair, Kevin Warsh. President Donald Trump nominated Warsh to the position, and Trump has been loudly calling for lower interest rates.
Traders see it as a near certainty that the Fed will leave its main interest rate steady after its two-day meeting ends Wednesday. Traders had been raising bets that the Fed may actually have to raise interest rates this year because of how high inflation has gotten and how solid the U.S. job market remains. But the tentative deal between the United States and Iran means traders are now betting on only a 58% chance of a hike this year, down from 71% a week ago, according to data from CME Group.
Elsewhere on Wall Street, Roku fell 0.9% after the company announced that Fox Corp. is buying the streaming pioneer in a cash-and-stock deal valued at approximately $22 billion. Roku’s stock had already soared 20% Friday, when early media reports emerged about a deal, which will give Fox access to the Roku channel, first-party data and more than 100 million global streaming households. Fox’s stock fell 16.1%.
In stock markets abroad, indexes climbed in Asia and Europe. Japan’s Nikkei 225 jumped 5% for one of the world’s biggest gains and finished at a record. Takashi Hiroki, chief strategist at Monex, said, “This is great news. Buying by foreign investors is leading the market with expectations of easing tensions around the situation in the Middle East.” South Korea’s Kospi surged even more, 5.2%, thanks in part to continued rallies for AI winners like Samsung Electronics. London’s FTSE 100 was an outlier and slipped 0.4%.
The language of the day is relief, but the structure underneath is the same one that keeps ordinary people exposed to war, inflation, and the whims of markets that celebrate every pause in violence as a trading opportunity.