US STOCKS-Wall Street jumps to near one-month highs as US-Iran ceasefire improves sentiment

By Purvi Agarwal and Avinash P

April 8 (Reuters) - Wall Street's main indexes climbed to near one-month highs on Wednesday after the U.S. and Iran agreed to a two-week ceasefire, sending crude prices lower on expectations that energy supplies through the Strait of Hormuz could resume.

The announcement came hours before U.S. President Donald Trump's deadline for Iran to reopen the Strait of Hormuz, the waterway that carries about one-fifth of global oil trade.

A senior Iranian official told Reuters that the passage could be opened on Thursday or Friday ahead of peace talks if the countries agreed upon a framework for the ceasefire.

Global markets, which had been reeling under conflicting signals for weeks, staged a rally, with stock bourses in Asia and Europe rising, while crude prices slid below $100 a barrel.

"Whether these early 'risk-on' moves are sustainable or not is another matter... If shipping starts to move through the Strait of Hormuz again, and there's strong evidence that things can return to pre-war normality, that will embolden investors," said David Morrison, senior market analyst at Trade Nation.

"But given the complexity of the issues around this, a two-week ceasefire is unlikely to be sufficient to convince investors that it's safe to go back in the water."

At 10:06 a.m. ET, the Dow Jones Industrial Average .DJI rose 1,308.99 points, or 2.81%, to 47,893.45, the S&P 500 .SPX gained 155.91 points, or 2.36%, to 6,772.76 and the Nasdaq Composite .IXIC gained 617.51 points, or 2.81%, to 22,635.36.

The small-cap Russell 2000 Index .RUT jumped 3% to a more than one-month high, while the CBOE Volatility Index .VIX slumped 4.74 points to 20.99, after hitting its lowest point since February 27.

The S&P 500 energy sector .SPNY was the only one in the red, down almost 5%. Exxon Mobil XOM.N shed 6.3%, Chevron CVX.N dropped 5.5%, and Occidental Petroleum OXY.N lost 7.7%.

Travel-linked stocks jumped, with Southwest Airlines LUV.N and United Airlines UAL.O advancing 10.8% and 12.8%, respectively. They boosted industrial stocks on the S&P 500 .SPLRCI by 3.8%, the top gainers.

Cruise operators Carnival CCL.N and Norwegian Cruise Line NCLH.N added 14.2% and 12%, respectively.

The S&P 500 tech index .SPLRCT rose 2.8%, helped by chip-linked stocks. The Philadelphia SE Semiconductor index .SOX briefly hit a record high, last up 5.3%.

Dow was lifted by gains in Goldman Sachs GS.N and American Express AXP.N.

This week, domestic inflation readings will be scrutinized for signs of whether the elevated crude prices during the war have added to price pressures. Comments from Federal Reserve officials and minutes from its March meeting will also be parsed.

Market bets show a 33.9% chance of a 25-basis-point cut in December, according to CME's Fedwatch Tool, up from 13.6% a day ago. Traders expected two cuts before the war broke out.

Among other movers, Levi Strauss LEVI.N gained 12.8% after the denim apparel maker raised its annual sales and profit forecasts.

Delta Airlines DAL.N advanced 8.6%, in line with peers, despite forecasting lower-than-expected profit for the second quarter. It also did not update its annual outlook due to uncertainty over fuel prices linked to the Iran war.

Advancing issues outnumbered decliners by a 6.74-to-1 ratio on the NYSE and by a 5.53-to-1 ratio on the Nasdaq.

The S&P 500 posted 18 new 52-week highs and no new lows, while the Nasdaq Composite recorded 108 new highs and 17 new lows.