Stocks romp to records, oil plunges on hopes of US-Iran peace deal

NEW YORK/LONDON — Oil prices cratered, Wall Street indexes scaled record highs and U.S. Treasuries surged on Friday, after Iran said the Strait of Hormuz was open for passage during a ceasefire in Lebanon and President Donald Trump said he expected to reach a deal to end the war soon.

Iranian Foreign Minister Abbas Araqchi said on X that passage for all commercial vessels through the strait, a key conduit for global energy flows, was completely open for the remainder of the 10-day truce brokered by the U.S. between Israel and Lebanon that was agreed on Thursday. Trump told Reuters the U.S. would work with Iran to recover its enriched uranium — part of a key sticking point in negotiations — and bring it to the United States.

Benchmark Brent crude futures settled 9% lower at $90.38 per barrel, having hit a session low of $86.09. U.S. crude settled down 11.45% at $83.85 a barrel. Those prices remain above pre-war levels around $70, but are down significantly from late March’s highs, which, for Brent, were close to $120 a barrel.

Stocks marched higher, with the Wall Street benchmark Standard and Poor’s 500 and Nasdaq setting their third straight record closes and the Dow Jones Industrial Average marking its highest finish since late February.

The Dow rose 1.79%, to 49,447.43, the Standard and Poor’s 500 gained 1.2%, to 7,126.06 and the Nasdaq Composite jumped 1.52%, to 24,468.48.

The small-cap Russell 2000 outperformed large-cap gains and also posted a record closing high.

“Energy prices coming down has a bigger impact on small caps because they have tighter margins,” said Nick Johnson, chief investment officer at Willis Johnson and Associates, adding, “it’s starting to become clear that the U.S. and Iran want to see this behind them.”

Large energy stocks that benefit from high oil prices recovered some earlier losses, but U.S. majors Exxon Mobil and Chevron closed down 3.6% and 2.2% respectively. American Airlines and United Airlines advanced sharply. Netflix provided its own market drama, with shares falling more than 9% after the streaming service delivered a downbeat growth forecast and said chairman and co-founder Reed Hastings was leaving the company.

Optimism that the war might be nearing an end eased concerns about renewed inflation.

Government bonds rallied, with the benchmark U.S. 10-year Treasury yield touching its lowest since mid-March. The yield, which moves inversely to prices, was last seen down 6.5 basis points to 4.246%. The 2-year note, which typically tracks expectations of rate moves from the Federal Reserve, fell 7.8 basis points to 3.7%.