U.S. stocks logged their strongest weekly performance since November, as a Pakistan-brokered ceasefire between the United States and Iran triggered a sweeping relief rally that unwound much of the damage inflicted on markets over the past six weeks of conflict in the Middle East.
The S&P 500 gained 3.6% for the week, ending Friday at 6,816.89, leaving the index less than 1% below its pre-war level of 6,878. The Nasdaq Composite advanced 4.7% for the week, closing at 22,902.89 on Friday, lifted by strong gains in semiconductor stocks including Nvidia and Broadcom. The Dow Jones Industrial Average rose 3% for the week, though it declined 269 points on Friday to close at 47,916.
The week’s defining moment came Wednesday, when President Trump announced a two-week suspension of U.S. military operations against Iran, contingent on Tehran agreeing to reopen the Strait of Hormuz. Markets responded with one of their most explosive single-session gains in months. The Dow surged 1,325 points — its largest one-day gain since April 2025 — while the S&P 500 jumped 2.5% and the Nasdaq climbed 2.8%. Global markets joined the rally, with Japan’s Nikkei 225 surging more than 5%, South Korea’s Kospi jumping 7% and Europe’s Stoxx 600 gaining nearly 4%.
The path to Wednesday’s breakthrough had been harrowing. Early in the week, markets gyrated as Trump set an 8 p.m. Tuesday deadline for Iran to reopen the strait or face strikes on power plants and bridges. Stocks spent much of Tuesday in negative territory before clawing back gains in the final hour after Pakistan’s prime minister publicly requested a two-week extension to allow diplomacy to proceed. Iran signaled it was receptive, and the White House said the president had been made aware of the proposal.
Oil markets told a more cautious story than equities throughout. Crude had been trading near $115 per barrel at the start of the week amid tight physical supply and ongoing disruptions in the Strait of Hormuz. After the ceasefire announcement, U.S. crude plunged 16.4% in a single session to close at $94.41 — its largest one-day decline since 2020. Still, Brent crude ended the week at $95.20 a barrel, reflecting persistent uncertainty about whether tanker traffic through the strait would fully resume.
By Friday, the mood had sobered slightly. The S&P 500 slipped 0.11% as investors weighed new statements from Trump and awaited diplomatic talks scheduled for the weekend in Islamabad, where delegations led by Vice President JD Vance were set to meet Iranian counterparts for the first substantive negotiations since the ceasefire took hold. The Dow fell 0.56% on Friday, though the Nasdaq eked out a 0.35% gain.
March inflation data released during the week showed consumer prices rising 3.3% year over year, driven largely by the spike in energy costs during the conflict. Core CPI, which strips out food and energy, rose a more moderate 2.6%, offering the Federal Reserve some breathing room. Analysts said the data reinforced the view that the Fed is likely to hold rates steady for now, with the trajectory of energy prices — and the durability of the ceasefire — a key variable heading into the summer.
The week’s biggest equity winner was Intel, which surged nearly 43% in April alone after announcing partnerships with Elon Musk’s Terafab project and Alphabet for custom AI chip development. AI hardware broadly outperformed, as did consumer discretionary and travel stocks, which had been among the hardest hit during the conflict. Carnival Cruise Line jumped 10% Wednesday alone after the ceasefire announcement, though the stock remains down 8% year to date.
Health insurers also had a strong week, with Humana gaining 11%, UnitedHealth Group rising 8% and CVS Health adding 6%.
Strategists remained divided on whether the rally had legs. Analysts at JPMorgan said the S&P 500 could push higher “as euphoria returns to markets,” but others cautioned that a two-week truce was not a resolution. “Financial markets will remain sensitive to any breakdown in talks,” Ed Yardeni of Yardeni Research wrote in a note, even as he reduced his recession probability estimate to 20% from 35% following the ceasefire.