S&P 500 Poised for Best Month Since 2020 Amid Hopes for Resolution to Iran Tensions

Stocks Surge as Strait of Hormuz Re-Opens, Easing Oil Shock

The S&P 500 Index jumped 1.3% on Friday, extending a five-day advance that has pushed it back over January's record high. This surge is part of a record-setting run that is sending the S&P 500 Index toward its biggest monthly gain since 2020.

The tech-heavy Nasdaq 100 Index hit its own record by climbing 1.4% in its 13th straight daily gain, the longest such winning streak since 2013. The Dow Jones Industrial Average jumped 2%, with the VIX dropping, oil falling, and bond yields tumbling as traders wagered that the Federal Reserve will be able to resume cutting interest rates before the year is out.

This optimism is driven by the re-opening of the Strait of Hormuz, an oil choke point, which Iran intends to open given the ceasefire in Lebanon. The move, subsequently confirmed by President Trump, fanned the optimism about the war's potential end that has been pushing stocks higher for the past two weeks.

The war has whipsawed markets ever since it began in late February and threatened to deal the global economy a significant hit by fueling inflation and cooling the pace of growth. However, stocks advanced sharply this month, recouping all of their earlier losses, as the US and Iran moved closer to ending the conflict. The S&P 500 has risen every day but one.

| Index | Gain | | --- | --- | | S&P 500 | 1.3% | | Nasdaq 100 | 1.4% | | Dow Jones Industrial Average | 2% |

The speed of the turnaround has some strategists concerned that prices no longer factor in the downside risk of higher inflation or slower growth — both of which loom as oil prices remain elevated. Earnings season continues to produce mixed results, with Truist Financial Corp. shares slipping on a provision for credit losses, despite an earnings per share beat.

Investors parsing the path of interest-rate cuts will hear from San Francisco Fed President Mary Daly and Richmond Fed President Thomas Barkin on Friday. The central bank's communications blackout period begins Saturday ahead of its next policy decision on April 29, though a hearing for Kevin Warsh, picked by Trump as the next Fed chair, is expected next week.