Dow jumps almost 1,000 points after Trump delays ultimatum for Iran to reopen the Strait of Hormuz
The Dow Jones Industrial Average saw a significant surge of nearly 1,000 points in early trading on Monday following President Trump’s decision to delay an ultimatum for Iran to reopen the Strait of Hormuz. Trump stated that the U.S. is currently engaged in “good and productive” negotiations with Tehran, leading to a positive response in the stock market.
The blue-chip index skyrocketed by 996 points, marking a 2.2% increase to reach 46,573. Additionally, other indices also experienced gains, with the S&P 500 rising by 113 points (1.7%) and the Nasdaq Composite index climbing by 2%.
Prior to Trump’s announcement of the delay on social media, futures had indicated a potential 1% decline in stocks. However, the market sentiment shifted significantly following the news.
Oil Prices Retreat
In response to the developments, oil prices immediately retreated, with Brent crude (the international benchmark) falling by almost 10% and West Texas Intermediate (the U.S. benchmark) dropping by 9%.
Trump had initially set a deadline for Iran to reopen ship traffic in the crucial Strait of Hormuz by Monday night, which carries a substantial portion of the world’s oil supply. The President had threatened to “obliterate” Iran’s power plants if they failed to comply. In retaliation, Iran had warned of potential attacks on U.S. and Israeli energy and infrastructure assets in the region.
However, on Monday morning, Trump announced a five-day delay on strikes against Iranian power plants and energy infrastructure, alleviating concerns of a potential escalation in the Iran war and its impact on the oil crisis.
Wall Street analyst Adam Crisafulli, head of Vital Knowledge, commented on the situation, stating, “The global economy was teetering on the edge of a precipice the likes of which Trump had never encountered during either of his two terms (worse than COVID and worse than tariffs), and his instinct for self-preservation is too great to drive off the cliff deliberately.”
Status of Talks Unclear
Despite Trump’s announcement, the Iranian Foreign Ministry issued a statement contradicting the President’s claims, denying any ongoing negotiations between the U.S. and Iran.
Although Monday saw a decline in oil prices, crude is still trading around 45% higher than pre-Iran war levels in late February. This has resulted in a significant increase in gas prices for Americans, with the average gallon costing $3.96, up more than $1 from a month ago.
Economic repercussions are expected to persist even if the conflict ends promptly. However, there is now a clearer path towards resolution, as noted by Crisafulli.
Chris Larkin, managing director of trading and investing at E*TRADE from Morgan Stanley, emphasized the importance of tangible progress in maintaining market gains. He highlighted the need for concrete developments on the geopolitical front to sustain the relief rally initiated by the positive news from the Middle East.
