Crypto soars, oil tumbles on Middle East ceasefire

What happened: Markets surged on January 8 as the U.S. and Iran agreed to a two-week ceasefire, ending fears of a full-blown conflict. The S&P 500 Index gained 2.35%, the Dow Jones Industrial Average rose 2.78%, and the Nasdaq 100 Index climbed 2.89%. Meanwhile, Brent crude oil prices dropped in response, with immediate relief for diesel costs expected to take time.

Market impact: The ceasefire drove a broad-based rally in stocks, with investors pouring into equities following the geopolitical uncertainty. Energy stocks and ETFs like the Energy Select Sector SPDR Fund (XLE) fell, as oil prices retreated. Companies with significant exposure to the Middle East, such as oil majors and defense contractors, saw their stocks react accordingly.

What to watch next: On January 15, the U.S. and Iran's ceasefire is set to expire, potentially reigniting geopolitical tensions if no further agreement is reached. Additionally, the U.S. Energy Information Administration's (EIA) weekly petroleum status report on January 14 will provide insights into crude oil and gasoline inventory levels, which could influence oil prices.