US Stock Market Recovers as Oil Prices Fall on Eased Middle East Tensions

The US stock market showed a modest rebound on June 18, with the Dow Jones Industrial Average closing up 72 points at 51,564, as declining oil prices eased inflation concerns following an improvement in Middle East tensions. On June 17, US President Trump and Iranian President Pezeshkian signed a memorandum of understanding to end military hostilities, a development that prompted market optimism about the reopening of the Strait of Hormuz.

US Vice President Vance announced at a press conference on June 18 that 12.5 million barrels of oil had passed through the Strait of Hormuz overnight, signaling the resumption of energy flows from the critical chokepoint. In response, crude oil prices fell sharply on the New York Mercantile Exchange (NYMEX), with West Texas Intermediate (WTI) crude futures touching 73.58 dollars per barrel—the lowest level since early March. Market analysts noted that the prospect of a reopened Strait of Hormuz represented good news for energy supply stability and contributed significantly to the decline in oil prices.

Beyond oil-related movements, broader US equity indices advanced. The S&P 500 and Nasdaq Composite both rose, with technology stocks leading gains. Intel's stock surged approximately 10 percent after President Trump announced on social media that Apple had agreed to collaborate with Intel on semiconductor design and manufacturing. This news spurred buying interest based on expectations of revenue expansion.

However, underlying market sentiment remained tempered by hawkish signals from the Federal Reserve. The Fed held its policy rate steady at the June 16–17 Federal Open Market Committee (FOMC) meeting, but the median of participants' rate projections shifted from "one rate cut in 2026" (March forecast) to "one rate increase in 2026." Fed Chair Wharsh, who assumed office in May, delivered a policy statement that market participants characterized as more hawkish than expected. The Fed funds futures market—which prices in rate expectations—showed a 34 percent probability of two rate hikes within the year by late June 18, an increase from 30 percent the previous day.

Market participants noted that the recovery was modest and trading remained subdued ahead of the Juneteenth holiday on June 19, when US markets would be closed. Analysts suggested that the true market reaction to the Fed's shift in tone and the reopening of the Strait of Hormuz would likely emerge in the following week, once normal trading resumed.