U.S. stock futures point to a sharply higher open on Wednesday, suggesting equities could stage a strong rally when trading begins.
Investor optimism has been fueled by news that the United States, Israel and Iran have agreed to a two-week ceasefire, a development likely to trigger significant buying activity at the start of the session.
In a post on Truth Social late Tuesday, President Donald Trump said he had agreed to halt bombing and military operations against Iran for two weeks, provided Tehran commits to the full, immediate and secure reopening of the Strait of Hormuz.
Trump added that Washington had received a 10-point proposal from Iran that he described as a “workable basis on which to negotiate,” noting that the ceasefire window could allow the two sides to finalize and implement a broader agreement.
Iran’s Foreign Minister Abbas Araghchi later indicated that Tehran would reopen the Strait of Hormuz for the same two-week period if attacks on Iran cease.
The announcement triggered a sharp fall in oil prices, with U.S. crude futures plunging by more than 17 percent and dropping well below the $100-per-barrel mark.
“The positive market reaction is understandable as a two-week ceasefire raises hope for a complete end to the conflict,” said Dan Coatsworth, head of markets at AJ Bell.
“The ceasefire gives the world a moment to breathe and take stock of events,” he added. “Unfortunately, there is no guarantee that everything will return to normal.”
Stocks had started Tuesday’s session under pressure but recovered through the afternoon, with the major indexes rebounding from their intraday lows before closing with mixed results.
The Nasdaq rose 21.51 points, or 0.1 percent, to 22,017.85 and the S&P 500 gained 5.02 points, or 0.1 percent, to 6,616.85, while the narrower Dow Jones Industrial Average slipped 85.42 points, or 0.2 percent, to 46,584.46.
Equities gained momentum late in the day after Pakistani Prime Minister Shehbaz Sharif urged President Donald Trump to extend his deadline for Iran to reopen the Strait of Hormuz by two weeks in order to “allow diplomacy to run its course.”
In a post on X, Sharif also called on Iran to reopen the Strait of Hormuz for the same two-week period as a “goodwill gesture.”
“We also urge all warring parties to observe a ceasefire everywhere for two weeks to allow diplomacy to achieve conclusive termination of war, in the interest of long-term peace and stability in the region,” Sharif said.
Although it remains unclear how Trump and Iran responded to Sharif’s appeal, the statement helped calm fears that tensions could escalate further after the president’s recent warnings.
Trump had previously threatened to target Iran’s power plants and bridges if Tehran failed to reach an agreement and reopen the Strait of Hormuz by 8 p.m. ET.
Continuing his tough rhetoric, Trump wrote in a Truth Social post, “A whole civilization will die tonight, never to be brought back again. I don’t want that to happen, but it probably will.”
The president also claimed that a “different, smarter, and less radicalized” leadership is now in control in Iran and hinted that major change could follow.
“WHO KNOWS?” Trump wrote, adding to uncertainty in the markets. “We will find out tonight, one of the most important moments in the long and complex history of the World.”
Among individual sectors, networking stocks saw strong gains during Tuesday’s session, pushing the NYSE Arca Networking Index up 2.4 percent to a record closing high.
Oil service companies also advanced notably, with the Philadelphia Oil Service Index rising 1.7 percent.
Transportation and semiconductor shares also posted solid gains, while housing and telecom stocks were among the weaker performers on the day.