U.S. stocks rose for a second straight session on Thursday as investors continued to bet that the fragile two-week ceasefire between the United States and Iran could hold, even though oil prices moved higher again and the Strait of Hormuz remained far from normal. The gains showed that, for now, traders were willing to focus on the reduced risk of immediate escalation rather than on the unresolved energy and geopolitical threats still hanging over the market.
The mood was more measured than the previous day’s surge, but still clearly constructive. The S&P 500 gained 0.7%, the Nasdaq Composite rose 0.8%, and the Dow Jones Industrial Average added about 384 points, or 0.8%. The follow-through mattered because it suggested Wednesday’s rally was not only a one-day short squeeze, but the start of a broader repricing of risk as long as the ceasefire remains intact.
That said, the rebound is still resting on a narrow foundation. Investors are buying into the possibility of de-escalation, but they are doing so while oil remains elevated, regional tensions continue, and shipping traffic through Hormuz still has not meaningfully recovered. In other words, optimism is back, but it is far from carefree.
Stocks climb even as oil turns higher
One of the more striking features of Thursday’s session was that equities continued to rise despite a rebound in crude. West Texas Intermediate advanced about 2% to trade above $96 a barrel after briefly moving back above $100 earlier in the day. Brent crude also pushed higher and held above $94 a barrel. That combination would normally be more difficult for stocks to absorb, especially after weeks of concern about fuel-driven inflation.
The reason markets were able to tolerate firmer oil was that investors were interpreting the move less as a sign of renewed panic and more as a reminder that the ceasefire remains incomplete. Prices were recovering from an earlier collapse, not launching into a fresh crisis spike. That distinction helped equities continue climbing even while energy markets remained unsettled.
It also showed that the market’s main focus has shifted. Instead of reacting mechanically to every rise in crude, traders are trying to judge whether the broader political path is moving toward stabilization or back toward confrontation.
Lebanon helped steady sentiment
Stocks improved further and oil came off its intraday highs after Israeli Prime Minister Benjamin Netanyahu said Israel had agreed to open direct negotiations with Lebanon. That comment gave markets a reason to believe the ceasefire might extend its stabilizing influence beyond the U.S.-Iran channel, even though the Lebanon front has remained one of the biggest threats to a wider regional truce.
The significance of that shift was immediate because Iran’s parliamentary speaker had accused Israel’s continued attacks on Lebanon of violating the ceasefire. Any hint that diplomacy might now reach that front was enough to calm markets somewhat, even if the actual military and political situation remains highly uncertain.
This is what investors are now trading on: not peace, but the possibility that the circle of conflict may stop expanding. That is a much lower bar, but for financial markets after the previous weeks of stress, it has been enough to sustain buying interest.
Meta helps lead the tech rebound
Technology stocks continued to provide important support, with Meta Platforms rising more than 3% after debuting its new artificial intelligence model. The gain reinforced the idea that large-cap tech remains one of the market’s preferred ways to re-enter risk once macro pressure begins to ease.
The move also fit a broader pattern that has emerged since the ceasefire announcement. Investors had sharply cut exposure to growth and AI-related names during the worst phase of the war-driven selloff, so any improvement in sentiment has naturally brought money back into those same stocks. Meta’s product announcement added a company-specific reason to buy, but the wider backdrop of easing geopolitical fear likely amplified the reaction.
That combination remains powerful. When macro pressure softens and a major tech name provides fresh AI momentum at the same time, the sector can regain leadership very quickly.
Defensive stocks rose too
The session was not purely a growth rally. More defensive parts of the market also moved higher, including Walmart and utility-related names such as Constellation Energy. That blend of winners is important because it shows investors are not becoming reckless. They are adding risk, but they are still keeping exposure to safer parts of the market.
In other words, the rally has breadth, but not the kind of excess that would suggest full confidence has returned. Traders are willing to buy cyclical and technology stocks, yet they are also still allocating toward areas that tend to hold up if the outlook deteriorates again.
That mix makes sense in the current environment. The ceasefire has improved the short-term picture, but too many major uncertainties remain for the market to abandon caution altogether.
Hormuz is still the unresolved issue
The biggest unresolved risk remains the Strait of Hormuz. Even though the ceasefire was tied to Iran allowing the waterway to reopen for the next two weeks, actual traffic has shown little improvement since the agreement was announced. Reports indicate that only some bulk carriers have moved through, while the broader flow of oil-linked shipping remains far below normal.
That is why investors are still treating the truce as fragile. The ceasefire may exist politically, but the commercial test of it has not yet been passed. As long as Hormuz remains only partially functional, the global energy system will continue operating under a cloud of uncertainty and the threat of renewed supply shocks.
The market is therefore rallying on belief rather than proof. As one investor quoted in the original material suggested, the simple existence of a ceasefire allows traders to imagine a longer-term resolution. But if the strait stays constrained for too long, that optimism will become harder to maintain. For now, stocks are rising because the worst case has been delayed. The next question is whether it has actually been avoided.
