US stocks surged overnight, with the Dow Jones Industrial Average leaping 1,125 points on Tuesday as doubt swung back to hope on Wall Street about a possible end to the war with Iran.
The S&P 500 gained 2.9% for its largest gain since May 2025. Just a day before, worries about the war had sent the main measure of Wall Street's health more than 9% below its all-time high set early this year.
The Dow Jones Industrial Average rallied 2.5%, while the Nasdaq composite jumped 3.8% on Tuesday.
The rebound came as financial markets seized on a couple of tenuous signals for hope about a possible end to the war. It's the latest manic swing following weeks of frenetic back and forth amid uncertainty about the war. The moves also came as Wall Street marked the end of the year's first quarter, a milestone that can cause a flurry of trading as fund managers close their books.
Trump eyes Iran offramp
Analysts said optimism entered markets overnight following a report from The Wall Street Journal saying President Donald Trump told aides he's willing to end the US military campaign against Iran even if the Strait of Hormuz remains largely closed. The strait is a narrow waterway connecting the Persian Gulf to the open ocean, and a fifth of the world's oil sails through it on a typical day.
Oil prices then took a sudden and sharp turn lower in midday trading following a news report from the Middle East quoting Iran's president Masoud Pezeshkian as saying it has "the necessary will to end the war" as long as certain requirements are met, including "guarantees to prevent a recurrence of aggression".
Oil prices fall on news
The worry on Wall Street has been that the war may last a long time and keep oil and natural gas from the Persian Gulf out of global markets, which could create a brutal blast of inflation.
Following Tuesday's possible signals of hope, the price for a barrel of Brent crude oil, the international standard, eased 3.2% to settle at $USD103.97. Benchmark US crude erased a gain from the morning and fell 1.5% to settle at $US101.38.
However oil prices could quickly revert to spiking and stocks fall again if tankers carrying crude can't get through the strait easily. Iran attacked a fully loaded Kuwaiti oil tanker in the Persian Gulf in the latest fighting in the region.
And oil prices have already shot high enough that inflation in Europe accelerated to 2.5% in March, up from February's 1.9%.
In the United States, the average price for a gallon of petrol topped $US4 per gallon ($US1.06 a litre) for the first time since 2022. That's squeezing budgets for US households and preventing spending on other things. Worries about that and pressured profit margins for companies meant the S&P 500 closed Tuesday with its worst loss for a quarter since the summer of 2022.
Tech stocks lead broad rally
The 4.6% loss would have been even worse if not for Tuesday's easing for oil prices, which helped stocks of companies that have big fuel bills, including airlines and cruise ship operators. But tech stocks were the strongest forces lifting the market, part of a widespread rally that saw four out of every five stocks on the S&P 500 rise. Nvidia rose 5.6% and was the single strongest force lifting the S&P 500.
All told, the S&P 500 jumped 184.80 points to 6,528.52. The Dow Jones Industrial Average climbed 1,125.37 to 46,341.51, and the Nasdaq composite rallied 795.99 to 21,590.63.
The Associated Press
