Stock markets globally rallied Monday following a tentative agreement between the United States and Iran to extend their ceasefire and reopen the Strait of Hormuz, ensuring the continued flow of crude oil. This development immediately translated into significant gains for capital, with the S&P 500 rising 1.9% and the Dow Jones Industrial Average climbing 1.4%, as investors anticipated a long-term fix to a conflict that has driven up prices for working households worldwide.
The Nasdaq composite also saw a 3% increase. Brent crude oil prices fell 4.8% to $83.14, returning to early March levels, though still higher than the roughly $70 price observed before the war began more than three months ago. This easing of oil prices was framed as a potential relief for households and businesses, which have faced increased costs for food, fuel, and fertilizer due to the conflict with Iran.
Capital Accumulation Surges
Companies with substantial fuel expenditures were immediate beneficiaries on Wall Street. United Airlines stock rose 4.7%, American Airlines climbed 3.3%, and cruise operator Carnival saw a 3.6% increase. The artificial-intelligence industry also experienced a surge in capital valuation, with Micron Technology rallying 9.8%, Advanced Micro Devices rising 7.2%, and Nvidia climbing 3.6%. Nvidia, identified as Wall Street’s most valuable company, was the primary driver of the S&P 500's upward movement.
Elon Musk’s rocket company, SpaceX, which also owns the AI company xAI, rose 14.2% on its second day of trading on Wall Street. This successful debut on the Nasdaq indicated continued investor demand for AI-related ventures. The market has assigned SpaceX a total value exceeding $2.1 trillion, a valuation greater than Exxon Mobil, Bank of America, and Coca-Cola combined.
In the bond market, Treasury yields eased, reflecting investor expectations that lower oil prices would reduce the pressure on central banks globally to raise interest rates. The yield on the 10-year Treasury decreased to 4.47% from 4.48% late Friday.
The State's Role in Market Stability
The Federal Reserve is scheduled to announce its latest decision on interest rates later this week, marking the first under its new chair, Kevin Warsh. President Donald Trump, who nominated Warsh, has publicly advocated for lower interest rates. Traders now consider it a near certainty that the Fed will maintain its main interest rate after its two-day meeting concludes Wednesday. This shift in market sentiment follows previous expectations of a potential rate hike this year due to high inflation and a robust U.S. job market. Data from CME Group showed that bets on a Fed rate hike this year dropped from 71% a week ago to 58% following the tentative deal.
Further consolidation of capital was observed with Roku falling 0.9% after Fox Corp. announced its acquisition of the streaming company in a cash-and-stock deal valued at approximately $22 billion. Roku’s stock had already soared 20% on Friday based on early media reports of the deal, which will grant Fox access to the Roku channel, first-party data, and over 100 million global streaming households. Fox’s stock, however, declined 16.1%.
Global Capital Gains
Stock markets abroad also registered gains. Japan’s Nikkei 225 jumped 5%, achieving a record close, with Takashi Hiroki, chief strategist at Monex, attributing this to “buying by foreign investors… with expectations of easing tensions around the situation in the Middle East.” South Korea’s Kospi surged 5.2%, partly due to continued rallies for AI companies such as Samsung Electronics. London’s FTSE 100 was an exception, slipping 0.4%.
Iran confirmed the agreement but stated that its implementation would not commence until the deal is formally signed, an event Pakistan indicated would occur Friday in Switzerland. Broader negotiations concerning Iran’s nuclear program are slated to continue over the next 60 days. The energy industry is expected to require months to return to full operational capacity, even if the Strait of Hormuz is reopened.