The Dow surges 1,300 in a worldwide rally as oil plunges toward $90 following a ceasefire with Iran

NEW YORK — Stock markets are surging worldwide, and oil prices are plunging back toward $90 per barrel after President Donald Trump pulled back from his threat to force a “whole civilization” to die in the war with Iran.

The S&P 500 leaped 2.6% after Trump, Iran and Israel agreed to a two-week ceasefire, just hours before a deadline Trump had set for Iran to open the Strait of Hormuz and allow oil to flow freely again from the Persian Gulf to customers worldwide. The Dow Jones Industrial Average was up 1,383 points, or 3%, as of 9:35 a.m. Eastern time, and the Nasdaq composite was 3.3% higher following even bigger gains in European and Asian stock markets.

To be sure, stock prices are still below where they were before the war. And oil prices are still higher because the threat remains that the war could continue and keep oil produced in the Persian Gulf area blocked in the Middle East.

The average price for a gallon of regular gasoline has already topped $4.16 in the United States, according to AAA. That’s up from less than $3 a couple days before the United States and Israel launched attacks to begin the war in late February. If oil prices stay high for a long time, it would push up the price of nearly everything that’s moved by truck, plane or boat.

“There is a reason to be optimistic, but it is still too early to tell, because, as you know, after all, it is Trump,” said Takashi Hiroki, chief strategist at MONEX.

So far in the war, Trump has set several deadlines for Iran to open the Strait of Hormuz and has threatened big repercussions if Iran doesn’t, only to delay them.

It’s similar to a year ago, when Trump initially threatened stiff tariffs on imports from other countries on “Liberation Day.” After a couple delays, his administration eventually negotiated lower tariffs with many countries, though they were still higher than from before his second term.

With uncertainty still remaining, “the mood remains one of cautious optimism rather than outright celebration,” said Tim Waterer, chief market analyst at KCM Trade. “The ceasefire is only two weeks long, and markets will be watching closely to see whether shipping through the Strait of Hormuz normalizes as promised and whether the fragile truce can pave the way for a more durable peace agreement.”

Still, financial markets made big moves following the ceasefire announcement.

The price for a barrel of benchmark U.S. crude oil plunged 17.5% to $93.15. Brent crude, the international standard, tumbled 16.6% to $91.11. It had briefly topped $119 when worries about the war with Iran were at their highest.

In Asia, where countries are more reliant on oil from the Middle East, South Korea’s Kospi stock index surged 6.9%. Japan’s Nikkei 225 leaped 5.4%, and Hong Kong’s Hang Seng jumped 3.1%.

European stock indexes rose nearly as much, with Germany’s DAX returning 5.2% and France’s CAC 40 rising 4.9%.

On Wall Street, companies with big fuel bills roared back to trim some of the sharp losses taken on worries about oil prices staying high.

United Airlines soared 13.7%, for example, which would count as a decent year for the stock. It cut into its loss for the year that came into the day at 20.1%.

Delta Air Lines climbed 11% after it also reported a stronger profit for the latest quarter than analysts expected. Norwegian Cruise Line Holding steamed 11.9% higher to trim into its 16.1% loss for the year so far.

In the bond market, Treasury yields eased as worries about high inflation and oil prices ebbed.

The yield on the 10-year Treasury fell to 4.25% from 4.33% late Tuesday. That’s a notable move for the bond market, and lower Treasury yields give a boost to prices for stocks, bonds and all kinds of other investments.

The drop should also help ease some of the quick recent rise in rates for mortgages and other loans taken out by U.S. households and businesses, which have been slowing the economy.