Oil prices sink and stocks rally worldwide on hopes for a reopening of the Strait of Hormuz

Trader Joseph Stevens, left, works on the floor of the New York Stock Exchange. (AP Photo/Richard Drew)

NEW YORK (AP) — Oil prices are sinking Wednesday, and stock markets are bursting higher worldwide with hopes that the United States and Iran are nearing a deal to allow ships to deliver crude from the Persian Gulf once again to their customers.

The price for a barrel of Brent crude oil, the international standard, sank 7.5 per cent to US$101.75, down from more than US$115 early this week. It dropped as President Donald Trump said the Strait of Hormuz could be “OPEN TO ALL” if Iran accepts a reported agreement that the U.S. president did not detail.

The small strait has caused big trouble for the global economy because the war with Iran has blocked oil tankers from using it to exit the Persian Gulf. A reopening could allow oil to flow freely again and remove upward pressure on inflation that’s driven prices up for all kinds of products worldwide.

On Wall Street, the S&P 500 climbed 1.2 per cent and was heading for another record. The Dow Jones Industrial Average was up 580 points, or 1.2 per cent, as of 10:15 a.m. Eastern time, and the Nasdaq composite was 1.5 per cent higher.

• S&P 500 market updates here

Stock markets abroad had even bigger gains, and indexes jumped 6.5 per cent in Seoul, 2.1 per cent in London and 3.1 per cent in Paris.

Of course, hopes have risen several times already on Wall Street about a possible end to the war with Iran, only to get dashed each time. That could happen again, and oil prices pared some of their steepest losses from Wednesday morning. The price for a barrel of Brent briefly dove below US$97 before returning above US$100 after Trump threatened to start bombing “at a much higher level and intensity” if Iran does not accept the agreement.

But Wall Street nevertheless latched onto potentially encouraging signals. Trump said Tuesday he was pausing his effort to forcefully reopen the Strait of Hormuz to commercial ships. And China’s foreign minister called for a comprehensive ceasefire following a meeting with Iran’s foreign minister. That could be influential because of how closely tied Iran is to China economically and politically.

Plus, in the meantime, big U.S. companies continue to turn in much stronger profits for the start of 2026 than analysts expected. That’s helping to support the stock market despite all the uncertainties about the war.

AMD helped lead the market with a surge of 17.8 per cent after it joined the list of big-name companies topping expectations for both profit and revenue. CEO Lisa Su said the chip company benefited from continued growth from artificial-intelligence technology, which is demanding tremendous amounts of computing power from data centers.

AMD also said its revenue growth could accelerate in the current quarter to roughly 46 per cent from a year earlier.

Another company enmeshed in the AI industry, Super Micro Computer, rallied 15.8 per cent after likewise delivering stronger earnings than analysts expected. Nvidia, the chip company that became the poster child of the AI boom, rose 5.1 per cent and was the single strongest force lifting the S&P 500 because of its immense size.

CVS Health climbed 6.5 per cent after delivering better results for the first quarter than analysts expected and raising its financial forecasts for the full year. The Walt Disney Co. gained 6.3 per cent after saying its “Zootopia 2” movie helped draw people to its streaming business, parks and cruise ships and delivering a better-than-expected profit. Uber Technologies drove 8.2 per cent higher after giving a bookings forecast for the spring that was higher than analysts expected.

Outside of earnings reports, companies with big fuel bills jumped on hopes that oil prices will continue to ease. That included gains of 5 per cent for United Airlines, 4.9 per cent for Carnival and 6.4 per cent for Royal Caribbean.

In the bond market, Treasury yields sank as falling oil prices took pressure off inflation. The yield on the 10-year Treasury dropped to 4.35 per cent from 4.43 per cent late Tuesday. That’s a notable move for the bond market.

Lower yields can bring down rates for mortgages and other kinds of loans going to U.S. households and businesses, which in turn could give the economy a boost. Lower yields also tend to push upward on prices for stocks and other kinds of investments. The 10-year yield, though, remains well above its 3.97 per cent level from just before the war.

In stock markets abroad, South Korea’s Kospi jumped above the 7,000 level for the first time to a record thanks to big gains for AI winners, including Samsung Electronics and SK Hynix.

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Stan Choe, The Associated Press. AP Business Writers Yuri Kageyama and Matt Ott contributed.