Wall Street opened sharply higher on Thursday after President Donald Trump formally signed an agreement with Iran that paves the way for an end to the Middle East conflict and the reopening of key energy export routes.
The rally reversed some of Wednesday’s losses, when markets came under pressure following signals from the US Federal Reserve that interest rates could potentially rise later this year.
At the opening bell, the Dow Jones Industrial Average climbed 0.8% to 51,923.02, while the benchmark S&P 500 gained 1.1% to 7,502.23. The technology-focused Nasdaq Composite outperformed, advancing 1.4% to 26,372.75.
Investor confidence was supported by expectations that the US-Iran agreement will reduce geopolitical risk, improve global energy supply and help keep inflation pressures contained. Oil prices have fallen significantly since details of the deal emerged, with Brent crude retreating below $80 a barrel after trading above $87 only days earlier.
The decline in energy prices has eased concerns that the conflict would trigger a prolonged inflation shock, improving the outlook for corporate earnings and consumer spending.
Technology stocks led the advance as lower oil prices and stabilising inflation expectations encouraged investors back into growth sectors. The Nasdaq’s stronger performance reflected renewed appetite for artificial intelligence, semiconductor and software companies following a volatile week for the sector.
Markets had fallen on Wednesday after the Federal Reserve left interest rates unchanged but indicated policymakers remain open to further tightening if inflation pressures re-emerge. Updated economic projections showed a notable shift from earlier expectations for rate cuts, with several officials now forecasting higher rates before year-end.
Despite those concerns, traders appear focused on the immediate economic benefits of lower energy costs and reduced geopolitical uncertainty.
The agreement between Washington and Tehran establishes a framework for ending hostilities and restoring normal shipping activity through the Strait of Hormuz, one of the world’s most important energy corridors. Any sustained reopening of the route is expected to increase oil supplies and support further declines in energy prices.
Investors will now be watching for additional details surrounding the implementation of the agreement, upcoming economic data releases and comments from Federal Reserve officials for clues on the future direction of US monetary policy.
For now, markets are treating the peace agreement as a significant positive development, helping to restore risk appetite and drive US equities higher despite lingering uncertainty over interest rates.
