Oil prices drop 9% and Wall Street rallies to a record after Iran reopens the Strait of Hormuz

NEW YORK (AP) — Oil prices dropped back to where they were in the early days of the Iran war, and U.S. stocks raced to another record Friday after Iran said the Strait of Hormuz is open again for commercial tankers carrying crude from the Persian Gulf to customers worldwide.

The S&P 500 leaped 1.2% to an all-time high and closed out a third straight week of big gains, its longest streak since Halloween. A freer flow of oil could take pressure off prices not only for gasoline but also for groceries and all kinds of other products that get moved by vehicles. It could even ultimately help people pay less on credit-card interest and mortgage bills.

The Dow Jones Industrial Average surged as many as 1,100 points before paring its gain to 868, or 1.8%. The Nasdaq composite climbed 1.5%.

The U.S. stock market has jumped more than 12% since hitting a bottom in late March on hopes the United States and Iran can avoid a worst-case scenario for the global economy despite their war. Friday’s reopening of the Strait of Hormuz, which may only be temporary, is the clearest signal yet for optimism, and President Donald Trump said late Thursday that the war “should be ending pretty soon.”

The price for a barrel of benchmark U.S. crude plunged immediately after Iran’s foreign minister, Abbas Araghchi, posted on X that passage for all commercial vessels through the strait “is declared completely open” as a ceasefire appears to be holding in Lebanon. He said it would stay open for the remaining period of the ceasefire, and the price for U.S. oil dropped 9.4% to settle at $82.59 per barrel.

Brent crude, the international standard, fell 9.1% to settle at $90.38 per barrel. To be sure, it remains above its $70 price from before the war, indicating some caution is still embedded in financial markets.

Several times since the war began, optimism on Wall Street has quickly deteriorated into doubt about a possible end to the fighting. That in turn has caused vicious and sudden swings of prices for everything from stocks to bonds to oil.

Minutes after the Iranian foreign minister’s announcement of the Strait of Hormuz’s reopening, Trump said on his social media network that the U.S. Navy’s blockade of Iranian ports remains “in full force” until both sides reach a deal on the war. He, though, also suggested that “should go very quickly in that most of the points are already negotiated” and emphasized it by using all capital letters.

Companies with big fuel bills soared to some of Wall Street’s biggest gains following the easing of oil prices.

United Airlines flew 7.1% higher, and Southwest Airlines climbed 5.1%. A day earlier, the head of the International Energy Agency had said that Europe has “maybe six weeks or so” of remaining jet fuel supplies.

Operators of cruise ships, which guzzle fuel, also steamed higher. Royal Caribbean Group gained 7.3%, and Carnival rose 7%.

Housing and auto-related companies likewise got some relief from the drop in oil prices.

With less threat of high inflation hurting the economy, a sustained drop in oil prices could convince the Federal Reserve to resume its cuts to interest rates to help the economy. The yield on the 10-year Treasury sank to 4.24% from 4.32% late Thursday, and lower yields can bring down rates for mortgages and other loans going to U.S. households and businesses.

Builders FirstSource, a supplier of windows and other products, rose 5.5%, and homebuilder PulteGroup gained 5% on hopes that lower mortgage rates will spur more people to buy houses. Carvana climbed 7% because lower loan rates can get more customers into new autos.

A strong start to the earnings reporting season for big U.S. companies has also helped support the U.S. stock market, and more financial companies joined the list delivering bigger profits for the start of 2026 than analysts expected.

State Street rose 2.5%, and Fifth Third Bancorp added 1.7% after both reported better results for the latest quarter than expected.

They helped offset a 9.7% slide for Netflix, which fell even though it delivered a better profit than expected. It did not raise its forecast for revenue growth for the full year, which analysts said may have disappointed some investors.

It also said Reed Hastings, cofounder and chairman of the streaming company, will step down from its board of directors in June when his term expires.

All told, the S&P 500 rose 84.78 points to 7,126.06. The Dow Jones Industrial Average jumped 868.71 to 49,447.43, and the Nasdaq composite climbed 365.78 to 24,468.48.

In stock markets abroad, stock indexes leaped in Europe following Iran’s announcement about the Strait of Hormuz. France’s CAC 40 jumped 2%, and Germany’s DAX returned 2.3%.

In Asia, where trading finished for the day before the announcement, indexes were weaker. Japan’s Nikkei 225 lost 1.8%, and Hong Kong’s Hang Seng fell 0.9% for two of the bigger losses.

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AP Business Writers Chan Ho-him and Matt Ott contributed to this report.