Airlines Are Ripping Higher and Oil Just Had Its Worst Day in Years

So last night Trump went on social media and announced a two week ceasefire with Iran. That was it. One post. And by the time markets opened this morning, the Dow had already ripped over 1,300 points, oil was in freefall, and airline stocks were going absolutely crazy. If you were not watching your portfolio at the open today, you genuinely missed one of the most dramatic single trading sessions of the year.

This blog is going to break down exactly what happened, why the market reacted so hard, and most importantly which sectors are winning and losing from this ceasefire news. Because not everyone is celebrating right now.

A Quick Recap on Why This War Wrecked the Markets in the First Place

If you need a refresher: back on February 28, the US and Israel launched joint strikes on Iran. Within days, Iran shut down the Strait of Hormuz, which is basically a narrow chokepoint in the Persian Gulf that something like 20% of the world's daily oil supply passes through. Not a little bit of oil. A fifth of everything the world uses, just stuck.

The IEA called it the largest supply disruption in the history of the global oil market. That is not a small claim. Brent crude shot past $100 a barrel in early March for the first time in four years and eventually ran all the way up near $126 at its peak. Jet fuel prices in major US cities were up nearly 88% since the war started. Gulf countries started cutting production because storage was filling up and there was nowhere to send the oil. Global supply dropped by something like 8 to 10 million barrels per day.

For context, the last time something close to this happened was the 1970s oil crisis. So yeah, markets were not in a good mood heading into today.

What the Ceasefire Actually Says and Why Wall Street Went Nuts

Trump posted that he agreed to suspend bombing and attacks on Iran for two weeks, contingent on Iran reopening the Strait of Hormuz and agreeing to a broader deal. Iran's foreign minister came out and said Tehran would allow safe passage through the Strait during the ceasefire period. That was basically the green light the market had been waiting weeks for.

Stock futures immediately skyrocketed. Asian markets surged overnight. European markets opened up nearly 4% across the board, with Germany's DAX up close to 5%. By the time US markets opened, the Dow was up over 1,300 points, the S&P 500 was up 2.5%, and the Nasdaq had rallied 3.5%. West Texas Intermediate crude futures collapsed more than 16% in a single session, settling around $94 a barrel. That is the biggest single day oil price drop since April 2020, back when COVID was crushing demand.

One analyst basically described it as markets instantly flipping back into a global growth reboot mode. When you remove a massive geopolitical risk premium from energy prices basically overnight, that is what you get. Everything that had been crushed by high fuel costs ripped back hard. And everything that had been quietly benefiting from high oil prices got hit.

The Big Winners: Airlines Are Going Absolutely Crazy

Airlines were the single biggest winners today, and it is not even close. This makes sense when you think about it. Jet fuel is the single largest operating expense for any airline. When oil prices spike 88%, your cost structure gets absolutely obliterated. Carriers have been cutting capacity, raising bag fees, and begging investors to be patient. So when oil drops 16% in one day, it is basically a gift from the sky.

Delta Air Lines led the charge and actually had a double catalyst today because the company also reported Q1 earnings this morning. Delta posted adjusted earnings of 64 cents per share, beating the 57 cent estimate, on revenue of $14.2 billion which also cleared expectations. Premium travel demand was a big driver, with premium ticket revenue up 14% from a year earlier. For the first time since late 2024, main cabin revenue also came in positive. The stock ripped about 12% on the day.

Now there is a catch with Delta that is worth noting. The company flagged that its fuel bill for Q2 is going to be about $2 billion higher than planned because of the war era fuel spike. CEO Ed Bastian basically said they cannot update their full year guidance yet because they do not know where oil is heading from here. Their Q2 earnings guidance of $1 to $1.50 per share came in a little light versus the $1.41 Wall Street was expecting, and the company said it plans to reduce capacity growth in the near term. So it was not a perfect quarter by any means. But with oil now crashing, those fuel cost assumptions are already becoming stale in a good way.

The rest of the airline sector followed Delta's lead. United Airlines jumped more than 10%, Southwest popped nearly 13%, American Airlines was up 11%, and JetBlue gained around 9%. The US Global Jets ETF, which is basically a basket of airline stocks, was up about 11% on the day. If the ceasefire holds and oil keeps pulling back, these stocks could have even more room to run as analysts start revising their fuel cost assumptions lower.

Cruise Lines, Chips, and Crypto: The Rally Spread Everywhere

Airlines were the headliner but the rally was much broader than just one sector. Cruise lines absolutely flew today because they also carry massive fuel exposure and benefit from a healthier global economy. Carnival was up nearly 10%, Norwegian Cruise Line gained around 9%, and Royal Caribbean was up somewhere in the 8 to 9% range.

Semiconductor and memory chip stocks also had a huge day. The ceasefire eased fears about global supply chain disruptions and shipping interruptions that had been weighing on the entire tech supply chain. Micron surged over 9%, Sandisk and Seagate were each up more than 8%, and Western Digital gained over 7%. On the bigger chip side, ASML jumped nearly 9%, Applied Materials was up close to 9%, Taiwan Semiconductor gained over 5%, and CoreWeave ripped nearly 7%.

Even the Magnificent Seven got in on it. Meta led that group with a gain of over 6%, while Amazon and Alphabet each added over 3%, and Nvidia climbed about 2%. Bitcoin topped $71,000 and crypto related stocks like Strategy and Circle Internet Group both jumped around 6%. Gold actually kept climbing too, up around 2.8%, and gold miners like Newmont and Freeport McMoRan each gained close to 6%.

Basically if you had any exposure to the global economy recovering, you had a green day.

The Losers: Energy Stocks Got Hammered

Not everyone was popping champagne today. The energy sector got absolutely crushed. When oil drops 16% in a single session, energy companies lose a massive chunk of their revenue assumptions almost overnight. It is the mirror image of what happened to airlines.

ExxonMobil dropped nearly 6%, Chevron fell about 4.5%, ConocoPhillips was down 6%, and Valero Energy slid 5%. Exploration and production companies with heavy Middle East exposure got hit even harder. APA Corp shed over 9%, Occidental Petroleum and Diamondback Energy each fell around 7%. Roth Capital actually downgraded Diamondback today on the back of the news.

This makes total sense from a fundamentals perspective. These companies had been benefiting from oil trading at elevated levels because of the war. The moment oil drops, their profit margins compress immediately. For every dollar oil falls, billions in projected revenue evaporate across the sector.

But Hold On: Is This Ceasefire Even Going to Last?

Here is where you have to pump the brakes a little before you go all in on airlines and cruise lines tomorrow morning. This ceasefire is two weeks long, conditional, and already showing some cracks. Late Wednesday night, Tehran said that several clauses of the ceasefire deal had already been violated. US strikes were reportedly continuing near Iran's oil infrastructure even after the announcement. Asian futures were already wobbling in after hours trading because of those reports.

Charles Schwab put out a note today basically saying that even with improved headlines, the real world normalization of shipping and supply chains takes time. The Strait of Hormuz reopening does not mean tankers immediately start flowing through at full capacity. Insurance contracts need to be renegotiated, shipping companies need to assess risk, and inventories need to be rebuilt. The warning was clear: real world supply normalization may lag way behind what the market is already pricing in.

There is also an inflation angle that is not going away. Both the ISM Manufacturing and Services PMIs showed their highest prices paid readings since 2022 last month. Services prices had their biggest one month jump in over 13 years. Even with oil down today, the Fed is still in a really tough spot trying to manage both slowing growth and rising prices. CPI data drops tomorrow morning and it could add more volatility on top of everything happening with the ceasefire.

Prediction markets are pricing in about 81% odds that Trump announces a full end to military operations before June 30, which suggests traders broadly think the truce holds and extends. But that is still a 19% chance it does not, and in geopolitics that is a pretty meaningful tail risk.

What Should You Actually Be Watching From Here?

If you are trying to trade around this theme, the most important thing to track is whether oil actually stays down. Today's move was huge but the market is pricing in the best case scenario. If Iranian officials keep saying the ceasefire terms are being violated, oil will bounce right back up and airlines will give back a chunk of these gains.

Delta's earnings today were a good template for the sector. The company is generating strong premium travel revenue and the underlying business is solid. But the full year guidance range of $6.50 to $7.50 in earnings per share was built on a fuel cost assumption that is now potentially way too high given where oil is sitting today. If the ceasefire holds through the next couple weeks, analysts are going to start ratcheting up earnings estimates for airlines across the board and that would be a genuine catalyst for the stocks to run even further.

On the flip side, energy stocks are not necessarily a screaming sell from here. The situation is still fluid. If the ceasefire falls apart this week, oil could snap back violently and those same energy names would recover fast. Traders who bought the energy dip today were essentially betting on the truce not holding.

The broader market rally today was also about more than just airlines vs oil. It was the market exhaling after weeks of geopolitical stress. But as multiple analysts pointed out today, things are not back to normal. Supply chains take time to heal, inflation is still elevated, and the Fed's hands are still somewhat tied.

The Bottom Line

Today was a massive day. The kind of session where you remember exactly where you were watching your screen. Airlines printed double digit gains, oil had its worst single session since the early days of COVID, and the broader market rallied hard on the hope that the worst of the energy crisis might finally be behind us.

But a two week ceasefire is not a peace deal. The situation remains fragile, the inflation data coming out tomorrow is going to matter a lot, and shipping normalization is going to take longer than markets are probably pricing in. The smart play right now is not to chase the rip blindly. Watch what oil does over the next few trading sessions. Watch whether Iran and the US can actually hold to the terms of the truce. And watch the CPI print tomorrow morning because that could send the whole narrative sideways in a hurry.

The bull case is real if the ceasefire holds. The risk case is also very real if it does not. That is the trade right now.