Nvidia stock jumps over 3% as US-Iran ceasefire eases oil prices

A fragile two-week ceasefire between the U.S. and Iran provided significant relief to global financial markets, sparking a broad rally in equities and sending oil prices tumbling more than 16 percent. The S&P 500 surged 2.5% as the de-escalation eased fears of a wider conflict that had threatened to push energy-driven inflation higher.

"I would frame this as relief, not resolution,” Baptista Research founder Ishan Majumdar said on Wednesday. “The ceasefire is temporary, and physical energy markets remain tight with lingering supply disruptions and uncertainty around the Strait of Hormuz.”

The market reaction was swift and pronounced. The Dow Jones Industrial Average rallied 1,325 points, or 2.8%, while the tech-heavy Nasdaq Composite also gained 2.8%. Chip maker Nvidia (NVDA), a barometer for the AI sector, jumped 3.1% to $183.57. In commodity markets, West Texas Intermediate crude plunged 16.4% to settle at $94.41 a barrel, a sharp reversal from levels that had topped $119 during the conflict.

The sudden drop in oil prices reshaped expectations for monetary policy, a critical factor for equity valuations. With inflationary pressures from energy costs easing, traders are now pricing in a nearly 25% chance the Federal Reserve could resume cutting interest rates in 2026, according to CME Group data. This marks a significant shift from just a day ago when some investors feared rate hikes might be necessary to contain war-related inflation.

The ceasefire announcement came less than two hours before a deadline set by President Donald Trump for Iran to reopen the Strait of Hormuz, a chokepoint for about a fifth of the world's oil supply. While the truce was welcomed, analysts remain cautious. Independent maritime intelligence firms report that Iran continues to require hefty tolls for passage through the strait, indicating that the underlying tensions have not fully dissipated.

For months, stocks like Nvidia have been weighed down by macroeconomic uncertainty, trading in a narrow range between $165 and $195 despite strong fundamentals in the artificial intelligence sector. The ceasefire allows the market to look past the geopolitical risk premium and refocus on corporate earnings and growth prospects. The rally extended to sectors hit hard by high fuel costs, with United Airlines soaring 7.9% and cruise operator Carnival climbing 11.2%.

The move was also reflected in bond markets, where the yield on the 10-year U.S. Treasury fell to 4.29% from 4.33%. Lower yields on government debt reduce the discount rate used to value corporate earnings, providing a tailwind for growth-oriented technology stocks.

This article is for informational purposes only and does not constitute investment advice.