Stock Markets Surge as Oil Drops Below $95

Oil prices plunged below $95 per barrel, and stock markets surged worldwide Wednesday after President Trump pulled back from his threat of devastating attacks against Iran.

• The S&P 500 leaped 165.96 points, or 2.5%, after Trump announced a two-week ceasefire.
• The Dow Jones Industrial Average soared 1,325 points, or 2.8%, to 47,909.92
• The Nasdaq composite rallied 617.15 points, or 2.8%, to 22,635.00.

Stock prices are still, however, below where they were before the war, the AP reports. And oil prices are still higher because the threat remains that the war could continue. Prices for both stocks and oil pared big moves as trading progressed Wednesday.

Financial markets have been prone to sharp and sudden reversals because of deep uncertainty about what will happen next in the war. "Is it just kicking of the can down the road, moving the goalposts, TACO Tuesday, or whatever metaphor we'd like, to only to have tempers flare and bombs drop again?" Brian Jacobsen, chief economic strategist at Annex Wealth Management, asked about the two-week ceasefire with Iran. "Who knows? But it's good enough for now to elicit a positive response from the markets."

• The price for a barrel of benchmark US crude oil plunged 16.4% to settle at $94.41 after almost dropping to $91 earlier in the morning. Brent crude, the international standard, tumbled 13.3% to $94.75 per barrel. It had briefly topped $119 when worries about the war with Iran were at their highest, but it's still above its roughly $70 price from before the war.

On Wall Street, companies with big fuel bills roared back to trim some of the sharp losses taken on worries about oil prices staying high. United Airlines soared 7.9% and cut into its loss for the year, which came into the day at 20.1%. Cruise ship operator Carnival climbed 11.2%. Delta Air Lines rallied 3.7% after it reported stronger results for the latest quarter than analysts expected. CEO Ed Bastian said demand for flights remains strong, and it's making moves to make up for higher fuel bills. Delta on Tuesday became the latest airline to raise its fees for checking bags.

The next moves for oil prices will likely depend on how many oil tankers can start exiting the Strait of Hormuz and how easy their passage is. In Asia, where countries are more reliant on oil from the Middle East, South Korea's Kospi stock index surged 6.9%. Japan's Nikkei 225 leaped 5.4%, and Hong Kong's Hang Seng jumped 3.1%. In the bond market, Treasury yields dropped as hopes built that easing oil prices could let the Federal Reserve resume its cuts to interest rates later this year.