US stocks closed higher early Monday, Beijing time. The US President stated that the Strait of Hormuz is "partially open" and will be fully opened on Friday, June 19th, when the United States and Iran will formally sign a memorandum of understanding. SpaceX surged more than 19% again on Monday, with its market capitalization exceeding $2.5 trillion. US stock markets will be closed on Friday in observance of Juneteenth.
The Dow Jones Industrial Average rose 468.77 points, or 0.92%, to 51,671.03 points. The Nasdaq Composite Index jumped 795.09 points, or 3.07%, to 26,683.94 points. The S&P 500 Index gained 122.83 points, or 1.65%, to 7,554.29 points.
Following its 19% surge on its debut last Friday, SpaceX shares climbed over 19% again on Monday, propelling its total market value to $2.52 trillion.
A chief market strategist at an investment management firm commented, "This seems much more orderly than I expected, which is not a bad thing. It hasn't become a meme stock immediately upon listing. People are actually buying and holding, adding it to their portfolios, not trying for a quick flip."
The US President stated on social media Sunday evening that the deal with Iran is "now complete." According to the Pakistani Prime Minister, the memorandum of understanding will be formally signed in Switzerland on Friday. A senior US government official indicated the memorandum has already been signed electronically.
The strategist noted, "This time it looks real, because Treasury yields and oil prices have both broken through key levels." This development "should take pressure off the Federal Open Market Committee's (FOMC) statements and is good news for the market in the long term."
Prior to this announcement, clashes between Israel and Hezbollah in Lebanon had raised doubts about whether the agreement could be finalized on Sunday.
The US President also stated he had authorized the reopening of the critical Strait of Hormuz passage, news which led to a sharp drop in oil prices. On Monday, the US Vice President said he expects the strait "to remain open long-term with free passage." US crude oil futures closed down approximately 4.9% at $80.75 per barrel.
While the strategist pointed out that it might take "a little longer" for prices of refined products like jet fuel to fall, the drop in crude oil to $80 is "a strong signal, especially with the FOMC meeting this week, indicating we don't need to raise rates and price pressures should ease relatively quickly."
According to the CME FedWatch Tool, federal funds futures show a probability exceeding 98% that interest rates will remain unchanged by year-end.
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