All three major U.S. stock indexes in New York rose in unison to close higher. The move came after U.S. President Donald Trump said he would hold off on military strikes against Iran, easing geopolitical tensions across the Middle East.
On the 23rd local time at the New York Stock Exchange, the Dow Jones Industrial Average finished up 1.4% from the prior session. The Standard & Poor's (S&P) 500 index, composed mainly of large caps, also rose 1.15% to close. The tech-heavy Nasdaq 100 index climbed 1.2% in a concurrent advance.
That day, President Trump said on his social media platform Truth Social that he was having productive talks with Iran. He then declared a temporary halt to military plans that had targeted Iran's energy infrastructure. Trump added that he would delay strikes for five days to give Iran time to reopen the Strait of Hormuz.
International oil prices slumped sharply right after Trump's remarks. West Texas Intermediate (WTI) plunged 9.7% to settle at $88.74 per Barrel. Brent crude, the global benchmark, also tumbled more than 14% intraday before closing below $100. Stock market investors took the drop in oil as a positive sign that inflationary pressure was easing and rushed in to buy.
Jay Woods at Freedom Capital Markets said the stock market had already been in a severe oversold state. According to data from research firm Bespoke Investment Group, before the transaction began that day, more than 50% of S&P 500 corporations had entered oversold territory. By contrast, only 5.4% were in an overbought state, where prices had risen too much in the short term.
There were also cautions against premature optimism. As things stand, Middle East conditions could swing sharply at any time. Chris Larkin at E*TRADE said, "For any kind of stable market to continue, visible and tangible follow-up steps are needed on the geopolitical front," adding, "It's still an environment where a single news headline can rattle stocks."