S&P 500 gains 0.9% as Strait of Hormuz deal eases Fed jitters

The S&P 500 rose 0.9% in the holiday-shortened week through June 18, its 11th gain in 12 weeks, as a US-Iran deal to reopen the Strait of Hormuz overshadowed Fed policy concerns.

"The geopolitical breakthrough provided a powerful counterweight to the Fed uncertainty that had been capping gains," said Sarah Lin, equity strategist at Edgen. "Investors rotated into risk assets as the immediate threat of a supply disruption evaporated."

The advance marked the S&P 500's second straight weekly gain and extended a rally that has lifted the benchmark in 11 of the past 12 weeks. Asian markets surged Monday after President Donald Trump confirmed the Strait of Hormuz waterway would reopen under the agreement between Washington and Tehran. Crude oil prices sank on the news, removing a key source of inflationary pressure that had been complicating the Fed's policy calculus.

The peace deal removes a geopolitical risk premium that had been embedded in energy prices and defense stocks, potentially redirecting capital into rate-sensitive and cyclical sectors. With the Strait of Hormuz accounting for roughly a fifth of global oil consumption, the reopening could ease supply constraints and give the Fed more room to consider rate adjustments later this year.

The rally unfolded despite lingering uncertainty over the Federal Reserve's next policy move. Traders have been parsing mixed signals from central bank officials, with some advocating patience on rate cuts while others point to cooling inflation as justification for easing. The Strait of Hormuz deal effectively reset the macro calculus by removing a key upside risk to oil prices, which had been feeding into broader inflation expectations.

The S&P 500's resilience — 11 positive weeks out of 12 — signals broad-based investor confidence that extends beyond any single catalyst. The advance has been supported by a combination of easing financial conditions, resilient corporate earnings, and now a de-escalation of one of the most significant geopolitical flashpoints in global energy markets.

The agreement between Washington and Tehran marks a dramatic reversal after months of heightened tensions that had threatened to disrupt the flow of oil through the strategic waterway connecting the Persian Gulf to the Arabian Sea. President Trump's announcement triggered a rally in riskier corners of Wall Street, with stocks climbing alongside cryptocurrencies as oil prices retreated.

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