Dow hits record high on US-Iran deal optimism, oil prices slide

June 15 (Reuters) – Wall Street’s main indexes rose on Monday, with ​the Dow touching an intraday high after the United States and Iran struck a preliminary agreement to end the Middle East war and reopen the ‌Strait of Hormuz, leading to a sharp fall in crude prices.

The deal framework, however, did not address key issues such as Tehran’s nuclear program and the Israel-Lebanon conflict. The pact is expected to be formally signed in Switzerland on Friday.

Crude prices plummeted 5% following the news and hit their lowest level since March, aiding shares of energy-sensitive airline and cruise stocks and hurting energy shares.

United Airlines (UAL.O), opens new tab rose 5.4%, ​while Delta Air Lines and American Airlines (AAL.O), opens new tab added 2.2% and 4.4%, respectively. Norwegian Cruise (NCLH.N), opens new tab and Carnival Corp (CCL.N), opens new tab advanced about 4% each.

Shares ​of oil majors Exxon Mobil (XOM.N), opens new tab and Chevron (CVX.N), opens new tab fell almost 4% each. The S&P 500 energy index (.SPNY), opens new tab was down 3.4%.

The CBOE Volatility Index (.VIX), opens new tab, Wall ⁠Street’s fear gauge, slipped to a more than one-week low at 16.35 points. It had risen to a more than two-month high the previous ​week.

The three main indexes were on track for a third consecutive session of gains, recovering after geopolitical tensions and a pullback in AI-related stocks halted ​Wall Street’s record climb.

“For markets, the Strait is the only thing that matters because its blockage was most pernicious for the global economy,” said Thierry Wizman, global forex and rates strategist at Macquarie Group.

Memory chipmakers were at record highs, with Micron (MU.O), opens new tab soaring 9.2% after multiple brokerages raised its price targets.
The Philadelphia SE Semiconductor index (.SOX), opens new tab hit ​a record high and rose 4.5%, with chip giant Nvidia (NVDA.O), opens new tab up 3%.
Seven of the 11 major S&P 500 sectors were in the green, with ​the S&P 500 tech index (.SPLRCT), opens new tab leading the advance with a 3.1% gain.

A resumption of oil flows from the Middle East and easing crude prices could give the U.S. Federal ‌Reserve, which ⁠is grappling with inflation, room to hold interest rates steady instead of raising borrowing costs.

“From a central bank perspective, this is more likely to discourage any major policy changes going forward, especially given that the shifts under consideration earlier were toward raising interest rates,” Wizman said.

Last week’s inflation data showed higher energy costs filtering into consumer inflation for May, sharpening focus on the Fed’s outlook at its policy meeting, due later this week, which will be ​Chair Kevin Warsh’s first since taking ​charge.

Traders expect the Federal Reserve to ⁠leave interest rates unchanged this week, but have pared back expectations for a 25-basis-point hike by the end of the year to 70%, from fully priced in the previous week, according to LSEG data.

At 11:24 a.m. ET, ​the Dow Jones Industrial Average (.DJI), opens new tab rose 647.45 points, or 1.26%, to 51,849.71, the S&P 500 (.SPX), opens new tab gained 128.90 ​points, or 1.73%, to ⁠7,560.36, and the Nasdaq Composite (.IXIC), opens new tab added 694.46 points, or 2.69%, to 26,583.30.

SpaceX’s (SPCX.O), opens new tab shares were up almost 8% after the Elon Musk-led firm ended its blockbuster IPO with a more than $2 trillion valuation.

Markets were relieved by the smooth trading during its landmark Nasdaq launch, setting a new template for companies and exchanges bracing for the highly anticipated OpenAI and Anthropic IPOs expected later this year.

In other movers, Fox (FOXA.O), opens new tab ⁠tumbled 16.7% after ​the company said it would buy Roku (ROKU.O), opens new tab in a $22 billion deal.
Advancing issues outnumbered decliners ​by a 2.31-to-1 ratio on the NYSE and a 2.21-to-1 ratio on the Nasdaq.

The S&P 500 posted 38 new 52-week highs and three new lows, while the Nasdaq Composite recorded ​178 new highs and 51 new lows.