U.S. stocks close higher; oil falls on hope of Hormuz Strait reopening

New York, September 25 — U.S. stocks closed higher on Wednesday as a rally in Treasury yields took a breather and oil prices pulled back from recent highs. The Dow Jones Industrial Average snapped a three-week losing streak.

• The Dow Jones Industrial Average rose 478.64 points, or 0.93%, to close at 51,828.62.
• The Nasdaq Composite gained 129.35 points, or 0.48%, to 27,068.72.
• The S&P 500 added 39.28 points, or 0.51%, to 7,743.41.

Among the S&P 500’s 11 sectors, eight advanced and three declined. The technology and industrial sectors led the gains, rising 0.99% and 0.94%, respectively. Energy and communication services were the worst performers, falling 0.87% and 0.65%, respectively.

Oil Prices Fall on Hopes for Strait of Hormuz Reopening

Iranian Foreign Minister Abbas Araghchi said on Wednesday that Tehran had conveyed a plan to the U.S. via Qatar to reopen the Strait of Hormuz. If Washington takes the necessary steps, the strait could be reopened within seven days, restoring normal maritime traffic.

Speaking at a press conference at the United Nations headquarters in New York, Araghchi said the clock would start ticking from the moment the U.S. accepts the plan. He estimated that the required U.S. actions would take about four to five days to implement, meaning the strait could reopen by the sixth day. Negotiations on a final agreement could begin on the seventh day.

Cautious optimism over a potential resolution to the Middle East conflict temporarily outweighed concerns about crude supply disruptions, sending international oil futures lower for the first time in two days.

• West Texas Intermediate (WTI) crude for November delivery fell $2.20, or 2.33%, to settle at $92.41 per barrel.
• Brent crude for November delivery dropped $2.28, or 2.14%, to $104.32 per barrel.

For the week, WTI November crude fell approximately 3.82%, while Brent November crude declined more than 0.43%.

Treasury Yields Dip After Friday’s Decline

Friday’s drop in oil prices helped ease some pressure on the bond market. Treasury yields rose intraday before retreating, with short-term yields falling more than long-term ones.

• The 2-year Treasury yield, which is more sensitive to Federal Reserve policy, fell about 7 basis points to 4.86%.
• The 10-year yield declined roughly 4 basis points to 5.165%.
• The 30-year yield hit its highest level since 2004 during the session and remained near 5.5%.

Despite the daily pullback, U.S. Treasuries posted their worst weekly performance since April of last year. Long-term yields rose nearly 20 basis points over the week, and medium- and long-term yields hit multi-year highs.

Apple Hits New Record High

Apple Inc. rose 1.53% to close at $341.07, a record high, bringing its market capitalization close to $5 trillion.

AI-related trading was a key driver of the week’s gains across the three major indexes. Meta Platforms surged more than 10% for the week, fueled by the popularity of its AI agent, Muse. The Muse craze also sparked demand for related chips, with ARM Holdings, Advanced Micro Devices, and Intel all gaining more than 10% for the week.

However, after reports that Muse was facing “computing power bottlenecks,” leading to service degradation and task failures, Meta fell 3.33% on Friday. Still, the stock posted a weekly gain of 12.99%.

Most semiconductor stocks ended the week higher. The Philadelphia Semiconductor Index rose 1.41% on Friday and gained 6.27% for the week, marking its fourth consecutive weekly gain—the longest such streak since May.

Consumer Sentiment Drops

The University of Michigan’s final September consumer sentiment index fell nearly 4 points from August to 48.1, the lowest level in four months. That compares with 51.7 in August and 55.1 a year ago.

Consumers’ one-year inflation expectations rose to 4.6% in September from 4.0% in August, the highest since June.

Fed Rate Hike Expectations Rise

Cleveland Fed President Beth Hammack said underlying inflation may remain above target and that the Fed needs to maintain a restrictive policy stance to bring it down.

Kansas City Fed President Jeffrey Schmid noted that inflation remains above the Fed’s 2% target and that policymakers have not yet fully overcome the inflation challenge.

New York Fed President John Williams warned that persistent supply shocks cannot be ignored.

Market expectations for another Fed rate hike have risen sharply. Investors now see a nearly 70% probability of a rate hike, up from 53% at the end of last week.

This presents a challenging combination for markets: consumer confidence in the economic outlook is declining, while inflation expectations are rising again. That could signal growing concerns about economic growth while also limiting the Fed’s ability to ease policy further.

The Fed’s next policy meeting is scheduled for October 27–28.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should act at their own risk.