Dow Jones jumps 680 points as ceasefire hopes fuel stock rally

• Iran reopened the Strait of Hormuz for commercial vessels during the ceasefire period, easing concerns about oil supply disruptions and inflationary pressures on energy prices
• All three major indexes are on track for their third consecutive week of gains, with the S&P 500 up 3.3% and Nasdaq up 5.2% for the week
• Markets now price the Federal Reserve to hold interest rates throughout 2026, a sharp shift from earlier expectations for rate cuts before the conflict began

Market Summary: Ceasefire Hopes Drive Major Rally

Key Market Movements:

U.S. equities surged Friday on Middle East de-escalation optimism. The Dow Jones jumped 686 points (+1.4%), while the S&P 500 rose 0.77% and Nasdaq 100 gained 0.73%. Both the S&P 500 and Nasdaq hit record closes Thursday, with the Nasdaq approaching its longest winning streak since 1992 at 13 consecutive sessions.

Geopolitical Catalyst:

President Trump announced a 10-day Israel-Lebanon ceasefire effective Thursday and indicated a potential U.S.-Iran peace agreement is imminent. Critically, Iran reopened the Strait of Hormuz to commercial vessels during the ceasefire period—a major development easing global oil supply concerns. This follows a seven-week Middle East conflict that had elevated energy prices and inflation fears.

Market Performance:

All three major indices are tracking their third consecutive weekly gain. Week-to-date returns: Dow +1.4%, S&P 500 +3.3%, Nasdaq +5.2%. Investors rotated back into risk assets, particularly technology and software stocks previously pressured during the conflict. Hedge funds added $86 billion in equity inflows as tensions eased.

Corporate Developments:

Netflix plunged 11.5% on weak current-quarter earnings guidance and leadership changes. Alcoa dropped 10.17% citing elevated costs and soft demand. Fifth Third Bancorp rose 2.2% on earnings.

Fed Outlook:

Multiple Federal Reserve officials scheduled to speak Friday, though recent commentary has had limited market impact. Markets now price the Fed holding rates throughout 2026, a dramatic shift from earlier rate-cut expectations.

Key Risk:

Investors remain cautious that weekend ceasefire negotiations could collapse, potentially triggering rapid market volatility and renewed supply disruptions.