Markets feel relief as the U.S. and Iran agree to a ceasefire on their earlier ‘ceasefire’ that was looking at lot like a war over Hormuz

Stock futures rallied on Sunday evening after the U.S. and Iran appeared to step back from a weekend of escalating violence in the Persian Gulf.

Futures tied to the Dow Jones industrial average rose 101 points, or 0.19%. S&P 500 futures were up 0.45%, and Nasdaq futures jumped 0.64%.

But energy markets were still spooked as any fighting around the Strait of Hormuz threatens the nascent recovery in ship traffic through the vital chokepoint.

U.S. oil futures climbed 1.5% to $70.29 a barrel, and Brent crude rallied 1.1% to $72.80.

Sources told Axios that both sides agreed to halt attacks on each other and meet in Qatar on Tuesday to resolve differences over the Strait of Hormuz.

Earlier on Sunday, Iran launched new attacks on Kuwait and Bahrain, while threatening a “complete halt” to peace talks. It continuined a tit-for-tat cycle of retaliation after U.S. airstrikes punished the regime for targeting commercial ships with drones.

The renewed skirmishes came as Iran seeks to shut down an alternate route through the strait that’s protected by the U.S. and bypasses a Tehran-backed channel meant to normalize its control over the narrow waterway.

President Donald Trump accused Iran of violating the two-week-old ceasefire deal and lobbed more of his signature apocalyptic threats, though he has also signaled reluctance to restart all-out war.

“There may come a point when we are no longer able to be reasonable, and will be forced to militarily complete the job that we very successfully started,” he wrote on Truth Social. “If that happens, the Islamic Republic of Iran will no longer exist!”

For now, the U.S. Navy appears to be making of a point of showing that the alternate route is still safe, as Gulf traffic data Sunday revealed a convoy of tankers heading through the strait under escort with their transponders turned on.

But Iran observers noted the regime was forcing the U.S. into an escalation trap over the Strait of Hormuz that could lead to more war.

“For the US, the fact that the Oman route might be blocked presents it with a big ultimatum: either the US escalates or gives IRGC control of the Strait of Hormuz. Logic says there’s no way that would happen, so escalation will continue,” HFI Research posted on X.

Meanwhile, investors are looking for rebound in a holiday-shortened week after tech stocks led a deep selloff last week.

With the U.S. observing Independence Day on Friday July 3, the Labor Department’s monthly jobs report will come on Thursday, a day earlier than usual.

Wall Street expects June payrolls to increase by 118,000, down from May’s gain of 172,000, and for the unemployment rate to remain steady at 4.3%.

This story was originally featured on Fortune.com