Global stocks surged while oil prices decreased on Wednesday amid growing optimism for a potential resolution to the conflict with Iran. Despite some disputed hopeful signs, earlier market optimism was dampened by ongoing intense fighting in the war zone.
The S&P 500 rose by 0.7%, extending its significant jump from the previous day, marking its strongest performance since the previous spring. Stock markets in Europe and Asia also experienced substantial gains, with South Korea’s market surging by 8.4% in catch-up to Tuesday’s rally on Wall Street.
The Dow Jones Industrial Average climbed 224 points, equivalent to a 0.5% increase, while the Nasdaq composite rallied 1.2%.
Oil prices retreated towards $100 per barrel following U.S. President Donald Trump’s statement on the potential conclusion of military operations within two to three weeks. This contributed to the positive sentiment after hints of optimism emerged on Tuesday, including remarks from Iran’s president expressing willingness to end the war under certain conditions to prevent future aggression.
Concerns on Wall Street revolve around the war’s potential prolonged duration leading to disruptions in global oil and gas supplies from the Persian Gulf, possibly sparking inflation. Market sentiments have been volatile, as optimism quickly turns to doubt amid conflicting statements and military actions.
Despite the recent market upswing, uncertainties persist, with Brent crude oil prices hovering around $101 per barrel, still significantly higher than pre-war levels. U.S. gasoline prices increased to an average of $4.06 per gallon.
While hopes for de-escalation provided a temporary boost to markets, analysts caution that the war’s lingering effects may endure even if resolved swiftly. President Trump is set to address the nation on the Iran conflict later in the day.
In the U.S. stock market, a majority of S&P 500 companies saw gains, led by Big Tech firms like Alphabet and Nvidia. Eli Lilly surged after regulatory approval for its weight-loss pill. The S&P 500 is now within 5.8% of its all-time high after briefly nearing a 10% decline earlier in the week.
Oil companies mirrored the decline in crude prices, with Exxon Mobil and Chevron posting significant losses. The S&P 500 closed up 46.80 points at 6,575.32, the Dow Jones Industrial Average added 224.23 points to 46,565.74, and the Nasdaq composite climbed 250.32 points to 21,840.95.