U.S. markets surged Wednesday as traders bet on a Mideast cease-fire, despite ongoing missile strikes. The Dow Jones Industrial Average jumped 2.8%, its best day since April 9, 2025, while oil prices plunged 16% to $94.41 a barrel—the largest single-day decline since the pandemic. The moves came as the U.S. and Israel announced a cease-fire with Iran, though the Strait of Hormuz remains a critical energy chokepoint.

For weeks, investors had positioned for a postwar rally, with short positions piling up in crude futures and energy stocks. Traders sent oil futures to one of their largest one-day drops on record, betting that reduced regional tensions would ease supply concerns. Treasury bonds rallied alongside stocks, reflecting a broad market shift.

Phil Blancato, chief market strategist at Osaic, described the moves as "pent-up demand for a modicum of good news." Investors acted before confirming whether the cease-fire would hold or if ship traffic through the Strait of Hormuz would resume. The market's optimism came despite continued missile and drone activity across the Middle East, highlighting traders' willingness to price in potential de-escalation.