Wall Street’s major stock index futures climbed on Monday following a weekend announcement that the United States and Iran had agreed to pause their hostilities, sending oil prices tumbling sharply lower.
Stocks that tend to benefit when energy costs fall surged in premarket trading. Airlines Delta and American were among the biggest winners, posting gains of 2.6% and 3%, respectively. Cruise lines Royal Caribbean and Carnival each climbed 3.2%.
Meanwhile, energy companies took a hit as Brent Crude prices dropped 6.3% to $90.6 per barrel. Occidental Petroleum fell 3.8% and Exxon Mobil slid 2.6% as a result of the oil price decline.
Last week, markets closed on a troubled note as escalating tensions in the Middle East rattled investors, who feared the conflict could push prices even higher ahead of a key Federal Reserve monetary policy decision expected later this week.
Even with the ceasefire announcement in place, shipping traffic through the Strait of Hormuz — a critical passage for global oil trade — remained sparse. Traders also stayed cautious due to ongoing attacks by Yemen’s Iran-aligned Houthi forces on Saudi oil facilities along the Red Sea coast.
The Federal Reserve has given little guidance on its interest rate plans since Kevin Warsh assumed the role of chair, leaving markets uncertain about what lies ahead for borrowing costs.
According to data compiled by LSEG, investors are currently pricing in at least a 25 basis point rate increase this year, with a 31% probability that the hike could happen as soon as this week.
As of 4:25 a.m. ET, Dow E-minis were up 443 points, or 0.85%. S&P 500 E-minis gained 65 points, or 0.87%, while Nasdaq 100 E-minis jumped 421.75 points, or 1.49%.
Futures tied to the interest-rate-sensitive Russell 2000 small-cap index rose 1.2%, and the CBOE Volatility Index — a measure of market fear — dipped roughly 0.87 points to 17.7.
This week will also bring a major test for the artificial intelligence sector, with earnings reports due from several of the so-called ‘Magnificent Seven’ tech giants, including Microsoft, Amazon.com, Meta, and Apple.
In premarket trading, Microsoft, Amazon.com, and Meta each rose more than 1%, while Apple edged up 0.3%. Chip stocks also gained ground, with Marvell Technology up 3.5%, Micron adding 3.2%, and industry leader Nvidia rising 1.2%.
Concerns about corporate debt-fueled spending on AI technology lingered after Alphabet and Tesla both reported negative cash-flow figures last week.
The tech-heavy Nasdaq remains down 8% from its all-time high, and the Philadelphia SE Semiconductor Index confirmed earlier this month that it has been in bear market territory since late June. A drop of 10% from a recent peak is considered a technical correction, while a decline of 20% qualifies as a bear market.
