U.S. stocks maintained their upward trend during midday trading on Wednesday. Technology and travel sectors led the gains, while crude oil futures plummeted. A two-week ceasefire agreement between the U.S. and Iran boosted risk appetite, prompting traders to actively buy stocks.
The Dow Jones Industrial Average rose by 1,225.82 points, or 2.63%, to 47,810.28. The Nasdaq Composite increased by 625.40 points, or 2.84%, to 22,643.25. The S&P 500 gained 157.19 points, or 2.38%, reaching 6,774.04.
Technology and travel stocks were the top performers, while most energy stocks declined.
The CBOE Volatility Index (VIX), which measures the S&P 500's 30-day volatility expectations based on index options prices, fell to 20.4 on Wednesday. This indicates increased market bets that conditions will calm over the next month.
Since the outbreak of the U.S.-Israel conflict with Iran, the VIX—often seen as a gauge of fear on Wall Street—peaked on March 27, hitting an intraday high of 31.65 and closing at 31.05. Before the conflict began, the VIX had closed at 19.86 on the last trading day prior to the escalation.
According to Pakistani Prime Minister Shehbaz Sharif, the United States and Iran have confirmed their participation in peace talks scheduled for Friday in Islamabad. Following the agreement of a two-week ceasefire, nations are intensifying efforts to broker a permanent agreement to end the Middle East conflict.
In a televised address, Sharif stated that the goal is to achieve lasting peace after the ceasefire. A statement from the Prime Minister's office noted that Iranian President Pezeshkian, in an earlier call with Sharif, "expressed appreciation for Pakistan's efforts."
Prior to this, U.S. President Trump announced on April 7 that he agreed to suspend bombing and attacks on Iran for two weeks, provided Iran agrees to "fully, immediately, and safely" open the Strait of Hormuz. He also stated that "this will be a two-way ceasefire."
Trump announced the news via social media around 6:30 PM ET on April 7. This was less than two hours before his stated "deadline" (8:00 PM ET Tuesday) for airstrikes on Iranian bridges and power plants.
Trump mentioned that he had spoken with Pakistani Prime Minister Shehbaz and Army Chief Munir, who requested the U.S. delay airstrikes on Iran.
Trump explained that the decision was made because the U.S. had "achieved and exceeded" all military objectives and had made significant progress toward a final agreement concerning long-term peace and regional stability in the Middle East.
Trump revealed that the U.S. had received a 10-point proposal from Iran, which he considered a viable basis for negotiations. "The vast majority of issues previously in dispute have been agreed upon between the U.S. and Iran. This two-week period will allow the agreement to be finalized and completed."
On March 21, Trump had issued an ultimatum to Iran, demanding it open the Strait of Hormuz within a deadline. This deadline was extended three times, from an initial "48 hours" to 8:00 PM ET on April 6, and later postponed to 8:00 PM ET on April 7.
Earlier on April 7, Trump had threatened Iran on social media, stating: "Tonight, the whole civilization will perish. I do not wish for this to happen, but it might."
Following Trump's ceasefire announcement, West Texas Intermediate crude futures plunged over 16% to $94.41 per barrel. The international benchmark Brent crude June delivery contract fell over 14% to $93.67 per barrel.
According to a statement from the Iranian Foreign Minister, Iran's Supreme National Security Council agreed to reopen the Strait of Hormuz for two weeks, provided all attacks cease. The statement noted that transit would need to be coordinated with Iranian armed forces. Media reports also indicated that Israel had agreed to the ceasefire.
Jay Woods, Chief Market Strategist at Freedom Capital Markets, commented: "The announcement of a temporary de-escalation in the Iran conflict isn't entirely surprising. The market has become better at anticipating Trump's next moves. The concern now is whether this all-too-familiar 'two-week' timeframe will lead to a resolution."
Trump posted on social media Wednesday morning, stating that the U.S. would cooperate with Iran to remove nuclear materials from the country and that the two nations were discussing tariff and sanctions relief for Iran.
Stocks that had been under pressure this year saw broad gains. Large-cap stocks like NVDA 3xLongSG261006 and Amazon rose more than 3% and 4%, respectively. Tesla's stock price increased over 4%. JPMorgan Chase and Boeing saw gains exceeding 2% and 3%, respectively.
Conversely, energy stocks, which had surged since the conflict began, mostly declined. ExxonMobil fell over 6%, while Chevron dropped more than 4%.
Investors experienced a mixed trading session on Tuesday, with the S&P 500 edging up 0.08% as traders bet on a potential ceasefire. The Nasdaq Composite rose slightly by 0.10%, while the Dow Jones fell by 85.42 points.
Stocks moved off their session lows in the final hour of trading on Tuesday after Pakistani Prime Minister Shehbaz Sharif requested Trump extend the deadline for attacking Iranian bridges and power plants by two weeks. Sharif, in a post on social media platform X, also asked Tehran to open the Strait of Hormuz for two weeks as a "gesture of goodwill."
Trump had previously set 8:00 PM ET Tuesday as the deadline for Iran to reach a deal with the U.S. to reopen the critical waterway. He threatened that if the conditions were not met, he would attack Iran's power plants and bridges, even destroying its "entire civilization."
At Tuesday's close, the S&P 500 was down 5.5% from the record high set earlier in the year. The benchmark index had approached a 10% correction in March before rebounding on market optimism that Trump would find a way to mitigate the conflict's disruptive impact.
Due to the closure of the Strait of Hormuz, crude oil prices had risen over 70% this year, pushing the U.S. national average gasoline price tracked by the American Automobile Association above $4 per gallon for the first time since 2022.
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