Dow reverses early losses as US-Iran deal hopes lifts markets

• The draft agreement includes commitments from both sides not to target infrastructure and guarantees for freedom of navigation through the Persian Gulf and Strait of Hormuz under joint monitoring, with negotiations on unresolved issues to begin within seven days.
• US crude oil prices hovered near $97 per barrel as traders speculated the deal could restore stable energy flows through the Strait of Hormuz, where traffic has declined sharply since the conflict intensified.
• Treasury yields edged lower as investors reassessed near-term inflation outlook, with reduced concerns about prolonged disruptions in global energy markets that had been driving oil-related inflation pressures.

Market Summary: US-Iran Deal Hopes Drive Stock Recovery

Key Market Movements:

US equity markets reversed early losses on Thursday, May 21, 2026, following reports of a draft peace agreement between the US and Iran. The Dow Jones Industrial Average climbed 309 points (+0.62%), while the S&P 500 and Nasdaq Composite each gained 0.37%.

Main Development:

Iranian media outlets reported that Washington and Tehran finalized a draft agreement with Pakistani mediation, potentially to be announced within hours. The deal reportedly includes:

• Immediate comprehensive ceasefire
• Mutual commitments not to target infrastructure
• Freedom of navigation guarantees through the Persian Gulf and Strait of Hormuz via joint monitoring
• Gradual sanctions relief tied to Iranian compliance
• Negotiations on unresolved issues within seven days

Market Implications:

The diplomatic breakthrough eased geopolitical concerns that had pressured markets earlier. US crude oil prices stabilized near $97 per barrel as traders anticipated restored energy flows through the Strait of Hormuz, a critical global shipping route that has seen sharply reduced traffic since conflict intensification.

Treasury yields edged lower as investors reassessed near-term inflation risks previously elevated by rising oil prices and supply disruptions.

Key Uncertainties:

Conflicting reports emerged regarding Iran's uranium policy. Reuters reported Supreme Leader Mojtaba Khamenei directed that near-weapons-grade uranium should not leave the country, while Al Jazeera later disputed any new directive was issued.

President Trump commented on toll proposals for Strait passage: "We want it open, we want it free, we don't want tolls."

The market recovery reflects investor optimism that diplomatic progress could stabilize regional trade routes and reduce energy market volatility, though execution risks remain.