Oil plunges and global stocks soar on hopes the Strait of Hormuz could reopen

NEW YORK Oil prices tumbled Wednesday and stock markets rallied around the world as investors seized on signs that the United States and Iran may be edging toward an agreement that could reopen the Strait of Hormuz to commercial shipping.

Brent crude, the international benchmark, plunged 7.8% to $101.27 a barrel after trading above $115 earlier in the week. Prices briefly dipped below $97 when optimism peaked, before recovering above $100 after President Donald Trump warned of intensified military action if Iran rejected the reported deal. The narrow waterway has been a chokepoint for global oil flows, and its closure during the conflict with Iran has been a key source of upside pressure on energy and consumer prices worldwide.

The prospect of renewed shipments from the Persian Gulf sent a wave of relief through markets. On Wall Street, the S&P 500 climbed 1.5%its best day in nearly a monthand hit another record high. The Dow Jones Industrial Average jumped 612.34 points, or about 1.2%, to 49,910.59, and the Nasdaq composite rose 2% to a record 25,838.94.

International markets posted even larger gains: Seoul surged 6.5%, Paris rose 2.9% and London advanced 2.1%. South Koreas Kospi pushed above the 7,000 mark for the first time, lifted by big moves in artificial-intelligence winners such as Samsung Electronics and SK Hynix.

Traders cautioned that optimism over a diplomatic breakthrough has lifted markets before only to be dashed. Oil pared some of its steeper losses after morning gains on the S&P, underscoring how quickly sentiment can swing when geopolitical headlines shift.

Lower oil prices helped ease near-term inflation concerns and pushed Treasury yields down. The yield on the 10-year U.S. Treasury fell to 4.35% from 4.43% late Tuesday. That drop is meaningful for fixed-income markets: lower yields can translate into cheaper borrowing costs for mortgages and business loans, and they typically provide a tailwind for equity valuations.

Corporate earnings also supported the rally. U.S. companies reported stronger-than-expected profits for the start of 2026, bolstering investor confidence even amid geopolitical uncertainty. Chipmaker Advanced Micro Devices led the charge on the S&P after jumping 18.6% when it topped expectations for profit and revenue and said revenue growth could accelerate to roughly 46% year-over-year in the current quarter. AMDs CEO Lisa Su cited sustained demand from artificial-intelligence workloads that are driving heavy compute requirements at data centers.

Other AI-related names also rallied after positive reports. Super Micro Computer surged 24.5% on stronger earnings, while Nvidiawidely seen as the poster child of the AI boomrose 5.7% and was a major driver of the S&Ps advance given its large market capitalization.

Several consumer and service companies also moved sharply higher after upbeat results or guidance. CVS Health climbed 7.6% after beating expectations and raising its full-year outlook. The Walt Disney Co. gained 7.5%, helped by stronger-than-expected profit and a box-office lift to its streaming and parks businesses from Zootopia 2. Uber Technologies jumped 8.5% on bookings guidance that topped forecasts.

Airlines and cruise linescompanies with sizable fuel costsbenefited from the oil drop. United Airlines and Carnival each rose about 6.8%, and Royal Caribbean gained 8.8%.

All told, the S&P 500 finished the session up 105.90 points at 7,365.12. Market participants noted that while lower oil and easing yields create a friendlier environment for stocks, the markets gains hinge on whether diplomatic momentum toward a cease-fire and a reopening of the Hormuz corridor actually holds.

Policymakers and diplomats offered mixed signals that day. President Trump said he had paused a push to forcefully reopen the strait, and Chinas foreign minister urged a comprehensive cease-fire after meeting with Irans top diplomatan intervention that markets viewed as potentially influential given Irans strong ties with China.

Investors will be watching any follow-through from those diplomatic moves and their tangible effect on shipping and oil flows. For now, the combination of easing energy prices, lower Treasury yields and robust corporate results created a powerful tailwind for global risk assets, but the situation remains sensitive to rapid geopolitical developments.