Markets Rally on Hopes for U.S.-Iran Peace Deal as Trump Cancels Strikes; Oil Slides (SPY, USO)

Risk appetite roared back across global markets after President Donald Trump said he had called off planned strikes on Iran and signaled that a peace agreement could be finalized within days. The de-escalation, paired with the prospect of reopening the Strait of Hormuz, sent stocks higher and oil sharply lower. On Wall Street, the S&P 500 finished higher by 1.75%, the Nasdaq Composite surged 2.5% and the Dow Jones Industrial Average jumped roughly 930 points into the close after Trump told reporters at the Oval Office that an Iran deal could be signed in Europe within days. The optimism carried into Asia, where Japan's Nikkei 225 rose as much as 4% and South Korea's Kospi spiked more than 8% in morning trading, with Hong Kong, Taiwan and Australia also advancing. The move in commodities was equally dramatic. U.S. crude fell more than 3.8% and Brent slid about 4.2%, dropping below $89.50 a barrel. The Strait of Hormuz, which in peacetime carries roughly one-fifth of global energy supplies, had been a central source of supply-disruption fears. Trump said the waterway would reopen once an agreement is finalized, easing the geopolitical risk premium that had been built into oil prices in recent weeks. Trump said discussions had been elevated to the highest level of Iranian leadership and that final points had been approved by all parties, a group he described as including the U.S., Israel, Saudi Arabia, the UAE, Qatar, Turkey, Pakistan, Bahrain, Kuwait, Jordan and Egypt. NBC News reported the U.S. military was about three hours from launching strikes when the president called them off. Investors should weigh the enthusiasm against a notable caveat. Trump has touted an imminent Iran deal dozens of times over nearly three months, and none has materialized. That pattern has produced repeated bouts of volatility, with markets rallying on optimism only to retrace when agreements failed to appear. A signed deal this weekend would mark a genuine turning point, but the absence of finalized terms leaves room for sharp reversals. The falling-oil, rising-stocks dynamic reflects a classic relief trade: lower energy costs ease inflation pressures and support consumer-facing sectors, while reduced war risk lifts broad sentiment. Energy producers face the opposite pull, as cheaper crude squeezes margins. For now, the market is pricing in peace — but until ink hits paper, traders are betting on a headline that has disappointed before.