US stocks opened higher on Wednesday, extending the momentum from the strong gains of the previous session, as investors are increasingly confident that a conflict between the US and Iran could be coming to an end.
The markets were supported by statements from Donald Trump and Secretary of State Marco Rubio, who indicated that the war could potentially be eased through direct talks with the Iranian leadership or a de-escalation without a formal agreement.
The market reaction followed an unverified report indicating that Iranian President Masoud Pezeshkian may be willing to seek an end to the conflict, under certain conditions. Earlier in the month, he expressed a similar position in a message on X, stating that “the only way to end this war … is to recognize Iran’s legitimate rights, payment of reparations, and firm international guarantees against any future aggression.”
Stocks rise as geopolitical tensions ease – Dow Jones jumps 322 points as hope for an end to the war with Iran supports markets
The S&P 500 index rose by 0.76%, while the Nasdaq 100 made gains of about 1%. The Dow Jones Industrial Average added 322 points, or 0.7%, marking a positive start to April.
The CBOE volatility index, often referred to as Wall Street’s fear gauge, dropped to its lowest level in over a week, reflecting a relaxation of investor anxiety.
This optimism follows Tuesday’s rally, when Wall Street’s main indices saw their biggest one-day gain in nearly a year.
However, despite this rebound, the S&P 500 and Nasdaq still experienced their largest monthly declines in a year, while the Dow recorded its biggest drop since September 2022.
Oil prices fall as ceasefire hopes grow
Oil prices, which had risen since the start of the conflict in late February, fell on Wednesday as prospects for peace improved.
West Texas Intermediate futures contracts fell by around 1% to just above $100 per barrel, while Brent slipped by about 2% to over $102.
Earlier in the session, oil prices had dropped by up to 3%, amid expectations that maritime traffic in the critical global oil transit route of the Strait of Hormuz could resume if tensions ease.
Energy stocks followed the decline in crude, with Exxon Mobil and Chevron shares falling by 3.1% and 2.8% respectively.
Economic data and corporate movements in focus
Economic indicators offered a mixed but stable picture.
Private sector jobs increased in March, according to ADP, while a report from the Department of Commerce showed retail sales rose by 0.6% in February, slightly above expectations.
Investors are now awaiting further labor market data, although US markets are closed on Friday for Good Friday.
Expectations regarding monetary policy have also shifted. Markets have largely ruled out Federal Reserve rate cuts this year, with energy price pressures related to the conflict clouding inflation outlooks.
In corporate news, Nike shares fell by 11.7% after forecasting a surprise sales decline in the fourth quarter. RH plunged by 22.1% after releasing disappointing revenue outlooks, while nCino surged by 21.3% due to strong prospects and the announcement of a $100 million share buyback.
Investors are also looking for more geopolitical clarity, as Donald Trump is set to address the nation later in the day, which could provide further guidance to markets operating in a volatile global context.
