New York. Oil prices fell more than 10% on Friday, while US stocks surged toward record highs after Iran announced the reopening of the Strait of Hormuz, a key route for global oil shipments.

The S&P 500 rose 1.3%, capping a third straight week of strong gains — its longest winning streak since late October. The Dow Jones Industrial Average briefly climbed nearly 1,070 points and was up 978 points, or 2%, by 11:45 a.m. Eastern time. The Nasdaq Composite gained 1.6%.

The market rally reflects growing optimism that the United States and Iran may avoid a worst-case economic fallout from their conflict. Since hitting a low in late March, the US stock market has climbed more than 12%. President Donald Trump said Thursday the war “should be ending pretty soon.”

Oil prices dropped sharply after Iranian Foreign Minister Abbas Araghchi announced that the strait — through which about 20% of global oil flows — is “completely open” to commercial vessels during a ceasefire period.

US benchmark crude fell 10.8% to $81.38 per barrel, while Brent crude, the international benchmark, declined 10.5% to $88.96. Both remain above pre-war levels of around $70, suggesting markets remain cautious.

However, minutes after Iran’s announcement, Trump said the US Navy’s blockade of Iranian ports would remain “in full force” until a broader agreement is reached, adding that a deal “should go very quickly.”

Lower oil prices boosted companies with high fuel costs. United Airlines jumped 8.8%, while cruise operators Norwegian Cruise Line and Royal Caribbean rose 7.8% and 9.5%, respectively.

Housing and auto-related stocks also gained on expectations that easing energy prices could help curb inflation and lead to lower interest rates. Builders FirstSource rose 7.1%, homebuilder Lennar added 5.7%, and used-car platform Carvana climbed 9.2%.

The drop in oil prices also pushed bond yields lower. The yield on the 10-year US Treasury fell to 4.23% from 4.32% late Thursday, potentially easing borrowing costs for mortgages and other loans.

Strong early earnings reports from financial firms supported the rally. State Street rose 4.6%, and Fifth Third Bancorp gained 1.9% after posting better-than-expected results.

Netflix, however, fell 9.9% despite beating profit forecasts, as it did not raise its full-year revenue outlook. The company also said co-founder and chairman Reed Hastings will step down from its board in June.

In Europe, markets rallied on the news, with France’s CAC 40 up 2% and Germany’s DAX gaining 2.3%. In Asia, where markets closed before the announcement, Japan’s Nikkei 225 fell 1.8%, while Hong Kong’s Hang Seng dropped 0.9%.