S&P 500 Hits Record High as Iran Reopens Strait of Hormuz; Oil Prices Plunge

The S&P 500 reached a new all-time high, climbing past 7,100, after Iran's Foreign Minister Seyed Abbas Araghchi announced the reopening of the Strait of Hormuz for commercial vessels. The announcement, delivered via X, coincided with a ceasefire in Lebanon, though Araghchi noted that ships must adhere to a "coordinated route" established by Iran. The move triggered an immediate and sharp correction in energy markets, with crude oil futures plunging more than 11%. The Strait of Hormuz serves as a critical global artery, typically facilitating the flow of one-fifth of the world's daily oil supply. President Donald Trump confirmed the reopening of the waterway but stated that the U.S. naval blockade would remain in effect until a formal agreement is reached between Washington and Tehran. While the blockade may be limited to Iranian vessels, the U.S. Navy continues operations to dismantle mines deployed by Iran during the conflict. Equity markets have demonstrated significant resilience, with the S&P 500 regaining all losses from the recent conflict and rising approximately 4% year-to-date. This rally is supported by strong fundamental expectations, as analysts project collective earnings growth of over 16% year-over-year for the index, marking a four-year high. Despite the current optimism, volatility remains a risk. The ceasefire between Israel and Hezbollah is currently limited to 10 days, and a broader deal with Iran remains contingent on the stability of the Israel-Lebanon situation. Additionally, investors continue to monitor systemic risks including persistent inflation, labor market weakness, and the impact of private credit.