Trump's US-Iran Peace Deal Sends Oil Plunging, SPY Rallies as Rate-Hike Fears Recede

The Quick Take

• Trump announced a US-Iran peace deal ending 100+ days of war, sending oil prices plunging and global equities surging
• SPDR S&P 500 ETF (SPY) advanced sharply as markets priced in lower inflation risk and reduced Fed rate-hike probability
• Crude oil futures fell significantly on news the deal will reopen the Strait of Hormuz to commercial shipping

US President Donald Trump announced a landmark preliminary peace deal with Iran on Sunday, ending a conflict that had roiled global oil markets for nearly four months. The announcement immediately triggered a broad risk-on rally across equities and commodities, with the S&P 500 advancing as investors recalibrated inflation and interest-rate expectations. The deal is expected to reopen the Strait of Hormuz, one of the world's most critical shipping chokepoints responsible for an estimated 20% of global oil trade, removing the geopolitical risk premium that had inflated energy prices since the conflict began in early 2026.

Oil-sensitive sectors felt the most immediate market impact: energy stocks faced selling pressure as crude prices fell sharply, while airlines, consumer discretionary, and industrials—all major users of petroleum-derived inputs—gained on margin relief. The S&P 500's rally reflects a broader repricing: persistently elevated oil prices had raised fears of sustained inflation that would keep the Federal Reserve from cutting rates. With the Iran deal removing that supply shock, bond market participants moved to price in a more accommodative Fed, sending Treasury yields lower and providing a valuation tailwind to growth and technology equities. International markets in India, Europe, and South Korea all advanced substantially on the news.

Investors should watch three key catalysts in coming sessions: first, whether Iran's parliament ratifies the deal and actually reopens Strait of Hormuz shipping within the stated timeline; second, the Federal Reserve's rate decision this week, where removal of oil-driven inflation pressure could materially shift the committee's language toward rate cuts; third, the trajectory of OPEC+ policy, as Saudi Arabia and other producers may need to recalibrate supply targets if Iranian crude returns to global markets. The durability of the peace-deal-driven equity rally hinges on the accord being binding, not merely a preliminary announcement subject to domestic political reversal.

Synthesized from 3 sources.