Wall Street Jumps After US-Iran Ceasefire Deal; Dow Soars 2.85%

Stocks rally despite lingering tensions after ceasefire deal

The three major U.S. stock indexes surged in their first trading session after the United States and Iran agreed to a two-week ceasefire. Tensions remained elevated, with Israel striking Lebanon and Iran signaling it could again move to block the Strait of Hormuz. Even so, investors appeared to judge that both sides still intended to uphold the truce.

On July 8, the Dow Jones Industrial Average closed up 1,325.46 points, or 2.85%, at 47,909.92 on the New York Stock Exchange. The S&P 500 rose 165.96 points, or 2.51%, to 6,782.81, while the Nasdaq Composite climbed 617.15 points, or 2.80%, to 22,635.00.

The U.S. and Iran reached the ceasefire agreement just 90 minutes before their negotiating deadline. Risk appetite spread quickly across markets afterward.

President Donald Trump wrote on Truth Social a day earlier that Iran had agreed to a two-week ceasefire on condition that the Strait of Hormuz be fully reopened. Iran's government also said the waterway would remain safe for passage during the two-week negotiation period. The two sides are set to begin talks on ending the war in Islamabad, Pakistan, on July 11.

Risks remain despite the ceasefire. Israel attacked Lebanon even after the truce was announced. Iran responded sharply and raised the possibility of canceling the agreement or reimposing a closure of Hormuz. Some Iranian media outlets reported that the strait had in fact been closed again. Iran's state-run Press TV reported that the tanker Aurora, which had been headed toward the exit of the Strait of Hormuz, abruptly turned back near the coast of Musandam.

Iran also attacked U.S.-allied countries in the Gulf region. The Yanbu pipeline, a key Saudi oil conduit, was hit by an Iranian drone. Kuwait, the United Arab Emirates, Qatar and Bahrain also came under Iranian missile and drone attacks even after the ceasefire deal. The U.S. and Iran have agreed in principle to a truce, but sporadic clashes may continue as forces favoring conflict over negotiations remain active, including Israel and some factions of Iran's Islamic Revolutionary Guard Corps, or IRGC.

Those Middle East risks could still weigh on equities even as ceasefire talks continue. Jay Woods, chief market strategist at Freedom Capital Markets, said the announcement of a temporary halt in the conflict with Iran was not much of a surprise. Markets have become far more adept at anticipating Trump's next move.

By sector, energy tumbled more than 3%, while every other group advanced. Communication services, materials and industrials each rose more than 3%. The Philadelphia Semiconductor Index jumped 6.34%, helped by expectations that the Strait of Hormuz would remain open.

All 30 stocks in the index rallied sharply. TSMC, Broadcom and AMD each rose about 5%. ASML gained 8.77%, Micron Technology rose 7.72%, and Intel surged 11.42%.

Exxon Mobil and Chevron each fell more than 4% as crude prices plunged. Delta Air Lines rose more than 3% on expectations for lower fuel surcharges, while Norwegian Cruise Line jumped 7.63%.

According to CME FedWatch, the federal funds futures market priced in a 0.4% chance of a 25-basis-point rate increase by the end of December this year. The Cboe Volatility Index, or VIX, fell 4.74 points, or 18.39%, to 21.04.

Park Su-bin, Hankyung.com reporter waterbean@hankyung.com