S&P 500 surges 2.9% to its biggest gain since last spring as hopes build for an end to Iran war

NEW YORK — U.S. stocks surged to their best day since last spring, and the Dow Jones Industrial Average soared more than 1,100 points as doubt swings back to hope on Wall Street for a possible end to the war with Iran. The S&P 500 leaped 2.9% Tuesday for its largest gain since May. Just a day before, worries about the war had sent the main measure of Wall Street’s health more than 9% below its all-time high set early this year. The Dow Jones Industrial Average jumped 1,125 points and the Nasdaq composite surged 3.8%. Oil prices eased to fuel the rally.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

NEW YORK — U.S. stocks are surging to their best day since last spring, and the Dow Jones Industrial Average soared more than 1,000 points Tuesday as doubt swings back to hope on Wall Street for a possible end to the war with Iran.

The S&P 500 leaped 2.6% and is heading for its largest gain since May. Just a day before, worries about the war had sent the main measure of Wall Street's health more than 9% below its all-time high set early this year.

The Dow Jones Industrial Average was up 1,035 points, or 2.3%, with an hour remaining in trading, after earlier climbing as many as 1,102. The Nasdaq composite jumped 3.6%.

The rebound came as dropping oil prices took pressure off Wall Street. The price for a barrel of Brent crude oil, the international standard, fell 3.2% to settle at $103.97. Benchmark U.S. crude erased a gain from the morning and eased 1.5% to settle at $101.38.

Oil prices have been dictating the U.S. stock market’s sharp swings since the war began, with Brent shooting from roughly $70 per barrel to as high as $119 at times. The worry is that the war may last a long time and keep oil and natural gas from the Persian Gulf out of global markets, which could create a brutal blast of inflation.

Analysts said optimism entered markets overnight following a report from The Wall Street Journal saying President Donald Trump told aides he’s willing to end the U.S. military campaign against Iran even if the Strait of Hormuz remains largely closed. The strait is a narrow waterway connecting the Persian Gulf to the open ocean, and a fifth of the world’s oil sails through it on a typical day.

Oil prices then took a sudden and sharp turn lower in midday trading following a news report from the Middle East quoting Iran’s president Masoud Pezeshkian as saying it has “the necessary will to end the war” as long as certain requirements are met, including “guarantees to prevent a recurrence of aggression.”

They're the latest manic, hour-to-hour swings to hit financial markets since the start of the war, as hopes rise and fall for a potential end to it.

Oil prices could of course quickly revert to spiking if tankers carrying crude can't get through the strait easily. Iran attacked a fully loaded Kuwaiti oil tanker in the Persian Gulf in the latest fighting that has shown few signs of lessening.

And oil prices have already shot high enough that inflation in Europe accelerated to 2.5% in March, up from February’s 1.9%.

In the United States, the price for a gallon of gasoline topped $4 per gallon for the first time since 2022. That’s squeezing budgets for U.S. households and preventing spending on other things. Worries about that and pressured profit margins for companies have the S&P 500 on track to close Tuesday with its worst quarterly loss since the summer of 2022.

That loss would have been even worse if not for Tuesday's easing for oil prices, which helped stocks of companies that have big fuel bills. Norwegian Cruise Line Holding steamed 6.5% higher, and United Airlines climbed 7.7% to trim their losses for the year so far.

Tech stocks, meanwhile, were the strongest forces lifting the market. Marvell Technology rallied 12.3% after Nvidia invested $2 billion in the company and announced a partnership with it. Nvidia rose 5.3% and was the single strongest force lifting the S&P 500.

Centessa Pharmaceuticals soared 44.1% after Eli Lilly said it was buying the company working on treatments for excessive daytime sleepiness and other neurological conditions. Lilly, which is paying up to $7.8 billion if certain conditions are met, rose 3.5%

They helped offset a 6.1% drop for McCormick. The spice company is buying most of Unilever’s food business, including such brands as Hellmann’s, for cash and stock valuing it at $44.8 billion.

In the bond market, Treasury yields eased again. The yield on the 10-year Treasury fell to 4.31% from 4.35% late Monday and from 4.44% at the end of last week. That’s a significant move for the bond market.

Lower yields should pull downward on rates for mortgages and other loans for U.S. households and businesses, which have been screaming higher since the war began. The yield on the 10-year Treasury was at just 3.97% in late February, before worries about high oil prices pushed traders to erase bets for cuts to interest rates by the Federal Reserve this year.

Yields remained lower following a couple reports Tuesday on the U.S. economy that came in better than economists expected. One said confidence among U.S. consumers unexpectedly improved. The other said U.S. employers were advertising more job openings at the end of February than expected, though fewer than the month before.

In stock markets abroad, indexes rose in Europe following a tougher finish in Asia. South Korea’s Kospi fell 4.3%, and Japan’s Nikkei 225 lost 1.6% for two of the bigger moves.