Oil Prices Bounce; Iran Says Hormuz Opening Hinges On Israel, But S&P 500 Rallies

• Crude oil fell from $117 peak to $91.05 before bouncing to $96.12 after Iran reportedly reversed course on reopening Hormuz until Israeli attacks on Hezbollah cease
• Airlines and cruise lines surged as fuel costs declined: United Airlines up 10.6%, Southwest 8.3%, and Carnival up 10.7%
• Energy stocks plummeted despite the broader rally, with Chevron down 5% leading Dow declines and oil sector stocks sharply lower after their conflict-driven surge

Market Summary: Oil Volatility and Equity Rally on Iran Ceasefire

Key Developments

Oil prices experienced extreme volatility following a Pakistan-brokered two-week U.S.-Iran ceasefire. U.S. crude plunged from Tuesday's peak of $117/barrel to as low as $91.05 before rebounding to $96.12 amid conflicting reports on Iran's reopening of the Strait of Hormuz. Iran initially agreed to reopen the strait but reportedly reversed course pending cessation of Israeli attacks on Hezbollah in Lebanon. Futures contracts indicate oil could fall below $80/barrel by August, compared to sub-$70 levels before the Feb. 28 conflict start.

Market Performance

The S&P 500 rallied 2.1% Wednesday morning, sitting 5.2% below its Jan. 27 record high but up 4.3% from the March 30 war bottom. The Dow Jones surged 1,100 points early in trading.

Sector Winners and Losers

Top Performers: Transportation stocks led gains as fuel-sensitive sectors rallied. United Airlines (+10.6%), Southwest (+8.3%), Delta (+6.5%), and cruise lines Carnival (+10.7%), Royal Caribbean (+6.9%), and Norwegian (+9.1%) topped the S&P 500. Housing and construction stocks also gained, with Sherwin-Williams, Caterpillar, and Home Depot each rising 4.5%-6%.

Decliners: Energy stocks reversed war-driven gains. Chevron fell 5%, leading Dow decliners. The U.S. Oil Fund ETF dropped 11.25%. ExxonMobil reported Q1 output will fall 6% due to Mideast asset disruptions.

Additional Movements

The 10-year Treasury yield fell 11 basis points to 4.23%. Precious metals rallied, with gold up 1% and silver up 3.1%, benefiting Newmont (+2.3%) and Freeport-McMoRan (+6.75%).