Oil prices tumble and stocks soar on US plan to end the Iran war

Investors cheered reports of a US peace plan to end the Iran war on Wednesday, with stocks rallying and oil prices dropping.

US West Texas Intermediate crude oil was down 5% to $87.75 while Brent crude fell 5% to around $99.28.

Major indexes were trading higher on Wednesday, with the tech-heavy Nasdaq Composite leading gains.

Here’s where major indexes stood at the 9:30 opening bell.

S&P 500: 6,626.96, up 1%

Dow Jones Industrial Average: 46,680.54, up 1.21% (+556.76 points)

Nasdaq Composite: 22,031.446, up 1.2%

Bond yields dipped. The 10-year US Treasury was down six basis points to 4.32%. Yields have spiked during the nearly month-long war, with investors weighing the impacts on inflation and the outlook for interest rates.

Reports From AP and The New York Times.indicated that the US had sent a 15-point ceasefire proposalto Iran. The reported proposal includes secure access to the Strait of Hormuz and was sent to Iran from the US by Pakistan.

Deutsche Bank said on Wednesday that most of the clients it surveyed believe a ceasefire will be finalized by mid-April. However, even if that timeline proves correct, respondents also believe that the Strait of Hormuz will take longer to normalize and that Brent oil will be about $100 a barrel for a few more months.

The market moves on Wednesday mirror price action on Monday, when oil fell and stocks rose after Trump posted on Truth Social sthat “productive conversations” between the US and Iran had taken place.

Trump’s post catalyzed a TACO trade moment for markets, but Iran responded, saying that talks hadn’t occurred, further clouding the possibility of a resolution.

Marko Kolanovic, JPMorgan’s former quant chief, summed up the conflicting messages the market is receiving.

“So if one can’t trust US or Iranian comments and post, then one should rely on (the only) relevant fact – is oil going through Hormuz? Answer is: NO.”

Following reports of a ceasefire proposal, Kolanovic said, “It’s relatively easy to talk down oil futures prices, but it is impossible to talk up level of fuel in tanks.”