Airline and cruise stocks rise as the Strait of Hormuz reopening eases travel fears

Shares of travel companies, including United Airlines and Royal Caribbean $RCL, were among Friday's top performers in the S&P 500 after both Iran and President Donald Trump announced the Strait of Hormuz was open, a development that helped calm investor anxiety over fuel costs and supply disruptions. Oil prices fell in tandem.

For airlines and travelers, the stakes were high. The strait funnels roughly a fifth of the world's oil. Its effective closure raised the prospect of tighter jet-fuel supplies, grounded or curtailed routes, and steeper prices across the board. Iranian Foreign Minister Seyed Abbas Araghchi announced via X $TWTR that passage for all commercial vessels through the strait was "completely open for the remaining period of ceasefire."

The S&P 500 went up 1.5%, the Dow rose by more than 1,100 points, and the Nasdaq $NDAQ gained 1.6%. Brent crude oil dropped 10% to below $90 a barrel, and WTI futures fell 12% to $83.

The market rally showed that investors were feeling more positive as diplomacy made progress. Earlier in the week, Trump spoke at an event in Las Vegas and said the Iran conflict "should be ending pretty soon" and was "going along swimmingly." He also said Tehran wants to "make a deal very badly."

The Strait of Hormuz has been at the center of an energy supply crisis since the U.S. and Israel launched attacks on Iran on Feb. 28. This conflict has killed more than 5,000 people, mostly in Iran and Lebanon. Iran effectively shut down commercial traffic through the waterway for much of the conflict. The supply disruption drove oil prices above $100 a barrel at their peak and pushed the national average gas price to $4.15 a gallon. A 0.9% monthly surge in the consumer price index in March followed. Gasoline posted its steepest single-month rise since the series began in 1967. Consumer sentiment fell to a record low of 47.6 in April. One-year inflation expectations rose to 4.8%.

Israel and Lebanon agreed to a 10-day ceasefire earlier this week. Trump said Israeli Prime Minister Benjamin Netanyahu and Lebanese President Joseph Aoun would receive White House invitations for what he described as the most substantive bilateral engagement between the two countries since 1983, according to CNBC. The U.S. State Department said both sides aimed to create conditions for lasting peace, including mutual recognition of sovereignty.

Over the past three weeks, the S&P 500 and Nasdaq are seeing gains not matched since 2020, according to The Wall Street Journal. The Nasdaq's weekly gain alone topped 5%.