Stock Market Rally on Hope of Iran War Ending Soon: Nasdaq Leads Biggest Gains Since May
March 31, 2026 – Global stock markets surged to their most significant single-day gains in nearly a year, fueled by optimism surrounding a potential resolution to the ongoing conflict in Iran.
On Tuesday, U.S. equities experienced a dramatic rebound, with the Nasdaq Composite index leading the charge with a 3.8% gain. The Dow Jones Industrial Average rose by 2.5%, adding 1,125 points, while the S&P 500 saw a 2.9% increase. These gains marked the largest daily advance for these major benchmarks since May 2025. The rally was sparked by reports that Iran’s president showed openness to ending the war with the United States and its allies. President Trump reportedly conveyed to his aides a willingness to conclude the conflict without fully reopening the Strait of Hormuz, a critical maritime passageway for global oil shipments. This development offered investors hope that the disruptive war could wind down sooner than feared.
Markets responded positively to the prospect of peace, although analysts cautioned that no formal agreements had yet been made. Stephanie Link, chief investment strategist at Hightower, noted, “Markets rallied on the comments, though nothing has been formally confirmed. It speaks to the oversold condition in the stock market, but also to the fact that if it is a short war, we can all go back to focusing on fundamentals.”
Leading European bourses also enjoyed strong gains amid the optimistic sentiment. The FTSE 100 climbed 1.83%, the DAX surged 2.86%, the CAC 40 advanced 2.35%, and other major indexes including Spain’s IBEX 35 and Italy’s FTSE MIB recorded rises exceeding 2%. This broad-based uplift underscored a global appetite for risk-on assets amid hopes of de-escalation.
Despite the positive news, tensions around the Strait of Hormuz remain fragile. In a stark reminder of ongoing instability, a Kuwaiti oil tanker anchored at Dubai was struck by a drone overnight. This incident reflects the sustained volatility in a region that used to handle nearly 20% of global energy trade before the conflict erupted.
Energy markets responded with mixed signals. Oil prices fell on Tuesday amid hopes that peace might ease supply disruptions. However, for the first quarter of 2026, Brent crude futures soared 71%, marking the biggest quarterly jump since the Gulf War in 1990. Simultaneously, U.S. gasoline prices surpassed $4 per gallon for the first time since August 2022, placing additional pressure on consumers.
Amid these developments, the European Union’s energy chief urged member states to conserve fuel in anticipation of a “potentially prolonged disruption” in global energy markets. This caution reflects continued uncertainty about the duration and eventual outcome of the Iran conflict.
President Trump on Tuesday morning also called on other countries to initiate their own operations to secure control over the Strait of Hormuz, underscoring the strategic significance of the waterway and the complexity of regional dynamics.
As markets navigate this precarious backdrop, investors remain watchful. The sharp rally shows eagerness to embrace favorable news, but the unfolding geopolitical situation will likely continue to influence market trends in the near term.
Reporting by Rebecca Feng and Hannah Erin Lang. For the latest updates on the Middle East conflict and financial markets, follow our live coverage and listen to the WSJ Minute Briefing podcast.