Dow Jumps 2.85% in Biggest Gain in a Year After US-Iran Ceasefire; Oil Plunges

U.S. stocks rallied on July 8 as a ceasefire agreement between the U.S. and Iran boosted risk appetite, while oil prices tumbled.

The Dow Jones Industrial Average rose 1,325.46 points, or 2.85%, to 47,909.92 at the close on the New York Stock Exchange. It was the index's biggest one-day gain since April last year.

The S&P 500 advanced 165.96 points, or 2.51%, to 6,782.81, while the Nasdaq Composite climbed 617.15 points, or 2.80%, to 22,634.99.

Investors were encouraged by a two-week ceasefire agreement reached a day earlier between the U.S. and Iran. The two sides accepted a proposal from Pakistan.

President Donald Trump had set 8 p.m. Eastern time the previous evening as the deadline for talks, but announced the ceasefire about 90 minutes before that cutoff. Iran also said it would reopen the Strait of Hormuz for two weeks on condition that all attacks stop.

Oil prices slumped more than 10%. Brent crude for June delivery settled at $94.75 a barrel on ICE Futures Europe in London, down $14.52, or 13.29%, from the previous session. West Texas Intermediate for May delivery fell $18.54, or 16.41%, to $94.41 a barrel on the New York Mercantile Exchange.

Treasury yields also fell sharply as lower oil prices eased inflation concerns. The yield on the 10-year Treasury note dropped 5 basis points to 4.290%, while the policy-sensitive two-year yield fell 4 basis points to 3.792%.

Minutes of the Federal Reserve's March meeting, released on July 8, showed officials had grown more open to raising interest rates after lifting their inflation outlook for this year because of the oil shock caused by the Middle East war.

Policymakers largely maintained that rate cuts would be appropriate over the longer term. Some, however, said the timing of expected cuts should be pushed back. One official said it could be appropriate to raise the target range for rates if inflation stays above target.

Among individual stocks, energy shares dropped sharply as oil prices sank. Exxon Mobil fell $7.69, or 4.69%, to $156.22, while Chevron lost $8.65, or 4.29%, to $192.89.

Nvidia rose $3.98, or 2.23%, to $182.08, and Alphabet jumped $11.86, or 3.88%, to $317.32. Microsoft added $2.04, or 0.55%, to $374.33, while Apple rebounded from the previous day's decline to gain $5.40, or 2.13%, to $258.90.

Tesla extended its weakness, falling $3.40, or 0.98%, to $343.25.

Noh Jung-dong, Hankyung.com reporter dong2@hankyung.com