Stock Market Update

[BRIEFING.COM] Stocks are surging today as oil prices face a sharp pullback following an announcement from Iran's foreign minister that the Strait of Hormuz will reopen to commercial traffic for the remainder of the U.S.-Iran ceasefire, which is set to expire on Tuesday. The DJIA (+2.3%) leads the major averages due to broad strength, while the advances of the S&P 500 (+1.5%) and Nasdaq Composite (+1.7%) have the indices pushing further into record territory. 

The announcement added fuel to what was already a notably constructive week for equities, with the major averages on track for their third straight week of gains of 3% or higher. While Iran has threatened to close the Strait again if the U.S. blockade is not lifted, reports that the two nations have made progress towards peace negotiations keep the geopolitical backdrop overwhelmingly positive.

Importantly, crude oil is down $9.84 (-10.8%) to $81.33 per barrel, prompting broad strength across the market and some impressive gains.

The consumer discretionary sector (+3.0%) holds the widest gain across S&P 500 sectors, with cruise lines such as Royal Caribbean (RCL 291.65, +25.70, +9.66%) boasting gains that near double-digits. Additionally, homebuilders are sharply higher in response to falling interest rates. The iShares Dow Jones US Homebuilder ETF is up 6.0%.

A similar pattern is playing out across the industrials sector (+2.6%) as airlines such as United Airlines (UAL 103.37, +8.34, +8.77%) surge amid the oil retreat while home improvement and building products stocks outperform in response to falling rates.

Eight total S&P 500 sectors trade higher, and seven of those hold gains of 1.0% or wider.

Tech and mega-cap stocks are keeping pace, with the Vanguard Mega Cap Growth ETF up 1.6% and the PHLX Semiconductor Index up 2.2%.

Meanwhile, the energy sector (-3.6%) pulls back as oil retreats, while the defensive utilities sector (-0.8%) misses out on the risk-on rally.

The communications services sector (+0.3%) is also a relative underperformer, weighed down by Netflix (NFLX 97.20, -10.59, -9.82%) after the company topped earnings estimates but issued disappointing Q2 guidance.

Outside of the S&P 500, the Russell 2000 (+2.6%) and S&P Mid Cap 400 (+2.5%) outperform amid hopes that easing inflation tied to oil could result in a friendlier rate environment.

Today's action solidifies the recent surge in momentum that has the S&P 500 and Nasdaq Composite venturing further into record territory with relative ease. The Nasdaq Composite is on track for its 13th consecutive higher finish, a feat not accomplished since 1992, underscoring the extent of the market's upside momentum as investors head into the weekend, which is expected to bring further U.S.-Iran negotiations.

There was no economic data of note today.