Dow futures soar nearly 1,300 points, oil tumbles on Iran ceasefire

Stock futures surged and oil prices plunged on Wednesday as a two-week ceasefire in the Iran war eased fears of a prolonged energy shock that has rattled markets for more than five weeks.

Futures for the Dow Jones Industrial Average soared 1,267 points, or 2.7%, to 48,079 in premarket trading. S&P 500 futures jumped 185 points, or 2.8%, while Nasdaq Composite futures rose 3.5%.

"Markets have been primed for this moment," Nigel Green, CEO of the financial firm deVere Group, said in an email. "Positioning had become defensive, volatility was elevated and energy prices were reflecting worst-case assumptions."

"A pause, even a temporary one, releases that pressure very quickly," he added.

Oil prices also plunged, with the U.S. benchmark, West Texas Intermediate, falling 17.9% to $92.76 a barrel, and the international benchmark, Brent crude, tumbling 16.3% to $91.53 a barrel, according to FactSet, as traders eyed activity in the Strait of Hormuz. Oil prices remain well above their pre-war levels.

MarineTraffic, a maritime monitoring service, said Wednesday morning on X that there were "early signs" of vessel movement through the waterway following the ceasefire announcement, which Mr. Trump announced Tuesday night on Truth Social.  

The president said his administration has received a 10-point proposal from Iran that is a "workable basis on which to negotiate." Iran also released a statement acknowledging the deal, which it said includes "continued Iranian control over the Strait of Hormuz."

Investors were preparing for the possibility that the Strait could remain closed through at least mid-April, which economists warned could push gasoline prices past $5 a gallon and put upward pressure on energy costs.

"Investors were bracing for escalation that could have choked off a fifth of global oil supply," Green said.  "Remove even part of that threat and capital flows back into equities at speed."

Still, it's unclear how shipping activity will unfold in the coming weeks, given the temporary nature of the ceasefire, TD Securities analysts said Wednesday in a research note.

"We question the appetite for tankers to begin to move back into the Strait for as long as it is unclear this will extend beyond two weeks," they said.