US stocks reversed earlier losses on Thursday after Israel’s Prime Minister Benjamin Netanyahu agreed to direct negotiations with Lebanon, which was seen as supportive of the fragile ceasefire deal the US struck with Iran and could lead to a reopening of the Strait of Hormuz.
Dow Jones Industrial Average (^DJI) rose about 0.6%, turning positive year to date following a powerful rally for the blue-chip benchmark on Wednesday.
The S&P 500 (^GSPC) and the tech-heavy Nasdaq Composite (^IXIC) gained 0.6% and 0.8%, respectively, extending their daily winning streaks to seven days.
Stocks climbed in afternoon trading after Netanyahu issued a statement agreeing to talks with Lebanon, raising hopes of resolving a major sticking point in the US’s talks with Iran that had appeared to put the two-week pause in Middle East hostilities in jeopardy.
President Trump told NBC News he was “very optimistic” about a peace deal with Iran ahead of talks scheduled for this weekend. The president and senior White House officials called Netanyahu on Wednesday, asking Israel to scale back its strikes on Lebanon, though Israel stated, “There is no ceasefire in Lebanon.”
Both the US and Iran had accused the other of breaching the agreement, which hinges on a key condition: that Tehran reopens the Strait of Hormuz, a vital global oil shipping route that has been shut for weeks amid the conflict.
Iran halted tanker traffic, saying continued strikes by US ally Israel on Lebanon violated the deal.
Oil prices rebounded from their biggest one-day decline since April 2020, surging amid revived worries about supply disruption. US benchmark West Texas Intermediate futures (CL=F) jumped 5% to $99 a barrel, while the international counterpart Brent crude futures (BZ=F) were up 2% to trade at $97 per barrel.