U.S. stock futures climbed Tuesday amid growing optimism after President Donald Trump announced a ceasefire between Israel and Iran. Although the market mood improved, doubts linger about how long the truce will last. Oil prices dropped sharply following the news, while gold declined as investors moved away from traditional safe havens. Meanwhile, focus shifts to Federal Reserve Chair Jerome Powell, who is set to testify before Congress amid mounting criticism from Trump.
U.S. Futures Rise on Ceasefire Announcement
Major U.S. stock index futures rose early Tuesday, reflecting relief over the potential easing of Middle East tensions. By 3:40 a.m. ET, Dow futures gained 347 points (0.7%), S&P 500 futures added 48 points (0.8%), and Nasdaq 100 futures advanced 234 points (1.0%).
Wall Street had closed higher in the previous session, boosted by hopes that U.S. involvement in the recent Israel-Iran air conflict would not escalate. Concerns had mounted over the possibility of U.S. strikes on Iranian nuclear sites sparking a wider regional conflict that could threaten key oil shipments.
In response to U.S. attacks, Iran launched missile strikes on a U.S. base in Qatar Monday night, causing no casualties. Trump dismissed the retaliation as “weak.”
Trump Confirms Ceasefire, Violence Persists
Trump declared the ceasefire “now in effect” and urged both parties to respect it, fueling hopes the 12-day conflict marked by deadly airstrikes was ending. However, he suggested the ceasefire would be implemented gradually, allowing some military actions already underway to finish.
Reuters reported an Iranian missile attack on Israel on Tuesday killed four people, while Iranian officials claimed an Israeli strike in northern Iran resulted in nine fatalities.
Questions remain about the ceasefire’s durability. Israel, supported by the U.S. in its effort to dismantle Iran’s nuclear and missile programs, agreed to pause hostilities. Prime Minister Benjamin Netanyahu said the operation achieved its goals.
Iran’s Foreign Minister Abbas Araqchi stated Tehran would not continue retaliatory attacks but would respond if Israel launched further aggression, a stance Netanyahu also echoed.
Oil Prices Fall as Tensions Ease
Oil prices dropped sharply after the ceasefire news, easing fears of disruption to Middle Eastern oil supplies. Traders had been wary of potential Iranian moves to block crude shipments through the critical Strait of Hormuz.
Although oil prices spiked earlier amid these concerns, Iran’s restrained missile strike on Qatar suggested de-escalation. By 3:16 a.m. ET, Brent crude futures fell 3.7% to $67.93 a barrel, while West Texas Intermediate futures dropped 3.6% to $66.04 a barrel—the lowest since before Israel’s recent attacks on Iran. Oil had already fallen 9% on Monday.
Gold Declines as Risk Appetite Returns
Gold prices fell over 1% during European trading as geopolitical fears eased. Spot gold dropped 1.4% to $3,320.57 an ounce, hitting its lowest since June 11. August gold futures declined 1.8% to $3,334.87 an ounce.
The ceasefire announcement weighed on the U.S. dollar, with the dollar index slipping 0.4% to 98.06. Meanwhile, the euro and Japanese yen strengthened due to the oil price decline. Both the EU and Japan are net oil importers, unlike the U.S., which exports oil.
Benchmark 10-year U.S. Treasury yields held steady after a slight dip on Monday, following signals from a Federal Reserve official supporting a possible rate cut next month. Treasury yields typically move inversely to bond prices.
Powell’s Congressional Testimony in Focus
Investor attention now turns to Washington, where Federal Reserve Chair Jerome Powell will testify before Congress over two days starting Tuesday. Markets will scrutinize his comments on the Fed’s recent decision to keep interest rates steady and its cautious approach to future changes, amid uncertainty linked to President Trump’s aggressive trade policies.
Trump renewed his criticism of Powell on Tuesday, calling him “a very dumb, hardheaded person” on social media and urging the Fed to cut rates by “two to three points,” blaming Powell’s “incompetence” for potential economic fallout.
Analysts at ING cautioned that any sign Powell’s stance is influenced by political pressure could spark a sharp decline in the U.S. dollar.