S&P 500 Trims Losses on Reports of US-Iran Talks to Reopen Hormuz

Key Facts

The S&P 500 trimmed its losses and moved near flat trading on September 24 as reports emerged of US-Iran discussions about reopening the Strait of Hormuz. Reuters, citing people close to the talks, said the sides were exploring a phased arrangement linking the return of shipping to an end to Washington’s economic blockade of Iran. The account describes a proposal under discussion, not a signed agreement or an approved timetable. A market report said the index, Dow and Nasdaq 100 had pared losses and were trading near flat. Equities were therefore responding to improved prospects for a breakthrough, while the effect on shipping still depends on what the two sides agree and carry out.

Stocks had begun the day under pressure from higher energy prices and US Treasury yields amid concern about a prolonged conflict. At 9:48 a.m. Eastern time, the S&P 500 was down 24.04 points, or 0.30%, at 7681.99, Reuters reported. By a market update published at 17:25 GMT, the index was trading near flat after narrowing that decline. Those readings compare two points within the same session, rather than one daily close with another. They show a change in the direction of trading after the diplomatic report, but trading near flat is not the same as posting a daily gain. The earlier reported decline also does not, by itself, establish that the morning loss was sharp.

The link between Hormuz and equities begins with the volume of energy moving through the waterway and runs through fuel costs, inflation expectations and yields. The US Energy Information Administration estimates oil flows through the strait averaged 20.9 million barrels a day in the first half of 2025, equivalent to about 20% of global petroleum liquids consumption. When investors expect part of that flow to be disrupted, the risk of scarce supply can put upward pressure on energy prices. Costlier energy can squeeze household spending and company margins, while higher expected inflation makes interest rates more consequential for equity valuations. Better prospects for passage can ease some of those pressures before ship movements actually recover. That is a possible transmission channel, not a guarantee that oil prices or yields will settle if talks continue.

The exchange described by Reuters’ sources has two connected elements: Iran would facilitate passage through Hormuz, and the United States would ease its economic blockade. The difficult question is sequencing, because neither side wants to give up bargaining power first without receiving something in return. For markets, the order and enforceability of the steps may matter more than confirmation that officials remain in contact. Safer passage requires a practical change in shipping conditions, while relief from the blockade requires US measures that can take effect. If either side offers only a promise, the supply-related risk premium could persist. That gap between negotiations and implementation helps explain a stock-market response without treating the shipping crisis as resolved.

The S&P 500’s move did not mean all its constituents performed alike during the session. The market report described a rebound in large technology shares including Alphabet and Meta, while some semiconductor shares remained under pressure. That split matters because the index combines sectors with different exposure to energy costs, bond yields and expectations for corporate spending. Reduced oil risk may support some stocks even as separate reasons for weakness continue to weigh on others. A recovery from the index’s intraday low therefore does not establish that every sector has reached the same judgment on the talks. The move would be more convincing if gains spread across more companies instead of relying heavily on a few large constituents.

The limited capacity of alternative routes constrains how much other energy infrastructure can replace a disrupted Hormuz passage. The Energy Information Administration estimates the main Saudi and UAE pipelines together could bypass about 4.7 million barrels a day, against 20.9 million barrels a day of oil flows through the strait in the first half of 2025. Stated pipeline capacity does not necessarily mean every barrel could be redirected immediately or replace every seaborne cargo. The wide gap between those figures helps explain why oil prices are sensitive to developments affecting shipping security. It also explains why investors will watch actual vessel movements as well as diplomatic language. Even a clear political arrangement would need operational follow-through before the market’s ability to move supplies changes.

The waterway matters for more than crude oil because liquefied natural gas, or LNG, also moves through it. The Energy Information Administration says about 11.4 billion cubic feet a day of LNG passed through Hormuz in the first half of 2025, representing more than 20% of global LNG trade. That extends the potential reach of a shipping disruption from crude buyers to gas-dependent purchasers and industries. Higher energy costs can feed into earnings expectations differently according to a company’s fuel use and ability to pass on prices. More reliable shipping could ease concern about input costs without removing other risks facing stocks. Watching oil and gas together thus gives investors a broader reading of how a durable opening might affect the economy.

Understanding the S&P 500’s response also requires attention to how the benchmark is built. It contains 500 large companies and is weighted by market capitalization adjusted for shares available to investors, according to S&P Dow Jones Indices’ methodology. A move in a very large company can therefore affect the index more than an equal move in a smaller constituent. If a small group of heavyweight shares rises while other stocks decline, the benchmark can look firmer than the average stock. For an investor holding an index-tracking product, those weights determine where much of the gain or loss originates. For a buyer or short seller, the breadth of participation is a useful test of the market’s response to the diplomatic news.

After the September 24 reports, the next test is whether Washington and Tehran set out terms for the sequence of blockade relief and restored passage. Markets will need to distinguish confirmation of talks, agreement on an arrangement and the start of vessel transits under it; each stage changes supply risk differently. Oil, yields and stocks moving together could indicate greater confidence in implementation, while diverging moves would suggest continuing caution. Persistent weakness in parts of the index despite an overall rebound would also limit the strength of the broad market signal. A breakdown over the terms would bring the restricted capacity of bypass routes back into focus. Until practical steps emerge, the S&P 500’s move reflects the prospect of relief rather than an established return to normal shipping.