NEW YORK — U.S. stock futures soared early Wednesday while oil prices plunged after President Donald Trump announced a two-week ceasefire with Iran, contingent on Tehran allowing the safe reopening of the Strait of Hormuz, triggering a sharp relief rally across global markets and easing fears of prolonged energy disruptions from the five-week conflict.

FTSE 100 Surges 0.8% Today as Oil Eases and Markets

Futures tied to the Dow Jones Industrial Average jumped more than 1,000 points, or about 2.3%, in overnight trading. S&P 500 futures rose roughly 2.5%, and Nasdaq 100 futures climbed around 3.2%. West Texas Intermediate crude futures tumbled more than 15% to near $95 per barrel, while the international Brent benchmark dropped over 13% to around $94.

Trump posted on Truth Social late Tuesday that he had agreed to suspend U.S. attacks on Iran for two weeks, describing it as a "double sided CEASEFIRE" in exchange for Iran's commitment to the "COMPLETE, IMMEDIATE, and SAFE OPENING" of the Strait of Hormuz. The announcement came just before an 8 p.m. ET deadline Trump had set, with Pakistan reportedly serving as an intermediary in last-minute talks. Iran's side signaled acceptance, with officials indicating safe passage for tankers under military oversight during the pause.

The Strait of Hormuz, through which roughly one-fifth of global oil supply normally flows, had been effectively closed or heavily restricted since late February when the conflict between the U.S.-Israeli coalition and Iran escalated, sending crude prices surging from around $60-$70 at the start of the year to peaks above $117. The ceasefire news reversed much of that geopolitical premium almost instantly.

Analysts described the market reaction as a classic risk-on move. "The fear of a prolonged shutdown of Hormuz had weighed heavily on equities and pushed energy costs to painful levels for consumers and businesses," said one Wall Street strategist. "Even a temporary pause brings immediate relief, though traders will watch closely to see if the truce holds and tanker traffic actually resumes."

The five-week conflict had disrupted Persian Gulf energy flows, driven U.S. gasoline prices above $4.10 per gallon nationally, and contributed to broader inflation concerns. Airlines, shipping companies and manufacturers faced higher fuel surcharges, while households felt the pinch at the pump. Wednesday's plunge in oil offered hope for eventual relief, though analysts cautioned that full pass-through to retail prices could take days or weeks.

Asian markets surged in early Wednesday trading on the news. Japan's Nikkei rose more than 4%, South Korea's Kospi gained around 6%, and other regional indexes posted strong gains. European futures pointed to a sharply higher open. The U.S. dollar weakened broadly as risk appetite improved, and Treasury yields eased slightly.

The ceasefire is framed as temporary, providing a window for negotiations toward a longer-term agreement. Trump indicated that a 10-point proposal from Iran could serve as a basis for talks. Both sides portrayed the pause as a victory, with Iranian officials emphasizing sovereignty and the U.S. highlighting de-escalation without full-scale strikes on civilian infrastructure.

Markets had swung wildly in recent sessions as Trump issued strong threats — including warnings of devastating consequences if Iran failed to reopen the strait — only to delay deadlines multiple times amid diplomatic efforts. Tuesday's regular session ended with modest gains for major indexes after earlier volatility, but the after-hours announcement unleashed pent-up buying.

Energy stocks, which had benefited from high crude prices, faced selling pressure in futures trading. Broader sectors sensitive to economic growth, including technology, consumer discretionary and industrials, led the futures rally as lower energy costs and reduced geopolitical risk boosted sentiment.

Economists noted that while the immediate market reaction was positive, uncertainties remain. A breakdown in the two-week truce could quickly reverse gains. OPEC+ had recently agreed to modest output increases, but physical constraints from the conflict limited their impact. Global oil demand forecasts for 2026 have been tempered by efficiency gains and economic headwinds in some regions.

For American consumers, any sustained drop in crude could eventually ease pressure on household budgets strained by elevated fuel and goods costs. However, analysts warned that lagged effects from recent highs would persist in the short term. Businesses with hedged fuel contracts may see mixed impacts.

The episode underscores oil's role as a geopolitical barometer. Even brief disruptions in the Strait of Hormuz can ripple through global supply chains, affecting everything from gasoline and plastics to heating oil and transportation costs worldwide.

Wall Street will open Wednesday with heightened attention on whether the ceasefire leads to tangible reopening of tanker routes. Satellite data and shipping reports will be scrutinized for signs of resumed traffic. Any confirmation of safe passage could extend the relief rally; setbacks might trigger renewed volatility.

Broader context includes ongoing U.S. efforts to balance energy security, inflation control and international alliances. The conflict had tested markets already navigating higher interest rates and shifting growth expectations.

As trading progresses, focus will also turn to corporate earnings season and Federal Reserve signals. Lower energy costs could support softer inflation readings, potentially influencing monetary policy outlooks.

For now, investors appear to be pricing in de-escalation and the prospect of normalized energy flows. The sharp moves in futures reflect how quickly sentiment can shift when geopolitical tensions ease, even temporarily.

The relief rally comes after weeks of headline-driven swings that saw oil spike dramatically and equities endure bouts of selling. Wednesday's developments provide a reminder of markets' sensitivity to Middle East developments while highlighting hopes for diplomacy amid conflict.

Traders and policymakers alike will monitor implementation of the ceasefire closely. With the two-week window now open, the coming days could determine whether this pause becomes a stepping stone to lasting stability or merely another chapter in a volatile saga.