US stock markets soar to new records amid Hormuz deal hopes
The S&P 500, Nasdaq Composite and Dow Jones Industrial Average are on track for their best five-day performance since April 2025.
US stock markets hit new record highs on Wednesday after US President Donald Trump signaled that there could be a deal announced later on Wednesday with Iran to reopen the Strait of Hormuz, after five months of war upending the region.
Markets have also been buoyed this week by strong AI-linked earnings.
What happened: During his cabinet meeting on Wednesday, Trump told reporters that the strait was “going to open very soon,” but warned that if that did not happen, Iran would be hit hard.
The previous day, US Secretary of State Marco Rubio and Treasury Secretary Scott Bessent both said that discussions had progressed to allow shipments to potentially resume as soon as this week.
“We are in talks with the Iranians,” Bessent told CNBC. “There is a chance we may have a deal today or tomorrow to open the strait and move towards a more normalized position in this conflict.”
The S&P 500 rose 0.3% to a fresh record, while the Nasdaq Composite added 0.1%. The Dow Jones Industrial Average increased by more than 443 points, rising 1% and also reaching an all-time high. All three indexes are tracking for their best five-day performance since April 2025.
Brent crude was down 0.46% to $78.99 at 11:08 a.m EDT on Wednesday.
Brent crude dropped almost 5% to roughly under $80 after Bessent and Rubio's remarks on Tuesday.
When asked whether Iran would be allowed to charge a toll for transiting the strait as part of the deal, Bessent said, “It would be freedom of movement.”
Bessent said prices of energy, fertilizer and other refined products should fall following the announcement of the deal.
Rubio also said that progress had been made on the talks to fully reopen the strait.
"There's been progress made in those talks, but not finality yet. We're hoping that will happen very shortly,” he told reporters Tuesday at the State Department.
Why it matters: Any agreement to reopen the Strait of Hormuz would mark the biggest de-escalation in the five-month-old conflict. The strategic waterway between Iran, Oman and the United Arab Emirates carried around a fifth of global oil shipments in peacetime. Since the conflict began at the end of February, disruptions to traffic through the strait have fueled sharp swings in energy markets, contributing to volatility across global equities.
Before the conflict began at the end of February, Brent crude, the international benchmark for oil prices, was around $70 a barrel. Prices peaked at nearly $115 in early May at the height of the war. Prices have since recovered.
Still, it remains unclear what a final deal will look like. US officials did not disclose what a deal would involve, while Iran has denied holding talks with Washington over reopening the strait, saying it is instead focused on bilateral discussions with Oman to jointly manage traffic through the critical chokepoint.
Know more: US stock markets are also having a strong week off the back of high corporate earnings that reassured investors about AI-driven demand.
Caterpillar, seen as a bellwether for the US industrial sector, and tech company Palantir posted strong annual revenue forecasts on Monday, increasing by 5.8% and 26% year-on-year, respectively. The firms have benefited from a buildout of AI data centers that have increased demand for their products.
Tech giants Amazon and Microsoft also posted strong results last week, signaling that multi-billion-dollar AI investments are yielding strong returns.
