Trump cancels Iran strike, sending Wall Street surging; Nasdaq jumps 2.5%

US stocks surged across the board Thursday as President Donald Trump said a ceasefire deal with Iran was imminent, easing fears of a broader Middle East conflict and lifting investor sentiment.

The Dow Jones Industrial Average closed up 929.97 points, or 1.86 percent, at 50,848.75. The S&P 500 gained 127.31 points, or 1.75 percent, to finish at 7,394.30, while the tech-heavy Nasdaq Composite rose 640.16 points, or 2.54 percent, to close at 25,809.66.

Markets opened on a cautious note, with crude oil prices spiking after Trump made a series of hawkish remarks toward Iran and investors remained on edge. Sentiment reversed sharply in the afternoon, however, after Trump officially called off a planned airstrike against Iran.

Trump, who had signaled the possibility of military action against Iran for three consecutive days, posted on his Truth Social platform Thursday afternoon that discussions with Iran "have gone all the way up to the Supreme Leader and received approval," and that he had canceled "the airstrikes and bombings of Iran that were scheduled for this evening."

Speaking to reporters at the White House, he said ceasefire negotiations had entered the final drafting stage and that a signing ceremony could take place in Europe this weekend.

The prospect of easing Middle East tensions rippled through oil markets as well. Expectations that the Strait of Hormuz could reopen drove crude prices sharply lower.

Brent crude futures for August delivery fell 2.92 percent to $90.38 a barrel, while West Texas Intermediate futures for July delivery dropped 2.58 percent to $87.71 a barrel.

The decline in oil prices eased inflation concerns and drew buyers into the bond market. The yield on the 10-year US Treasury note fell 10 basis points from the previous day to 4.45 percent.

Semiconductor stocks, which had been under pressure in recent sessions, rebounded strongly and led the broader market higher. The Philadelphia Semiconductor Index surged roughly 8 percent, its biggest single-day gain in a year.

Intel jumped nearly 9 percent after Bank of America upgraded the stock to buy.

Oracle, by contrast, fell 8.5 percent after announcing plans to raise additional capital and issue bonds to expand its AI infrastructure.

Anticipation surrounding the Nasdaq listing of Elon Musk's space company SpaceX, set for Friday, also buoyed the market.

SpaceX priced its initial public offering at $135 per share, valuing the company at $1.77 trillion. The offering size of $75 billion would make it the largest IPO in US history.

The producer price index released Thursday showed a 6.5 percent year-on-year increase, the highest reading since November 2022, when it stood at 7.4 percent — a rise not seen in three and a half years.

Investors largely looked past the inflation data, focusing instead on the potential for oil prices to stabilize as geopolitical risks from the Middle East recede.

"The path to resolution may not be smooth, but our base case is that diplomatic efforts will ultimately prevail," said Ulrike Hoffmann-Burchardi, chief investment officer at UBS. "Investors will refocus on the solid economic fundamentals and earnings growth in the US and Europe."