U.S. stock index futures moved slightly lower in premarket trading on Thursday as investors monitored whether the two-week ceasefire in the conflict with Iran would hold, following early signs of tension surrounding the fragile agreement.
The pullback comes after a strong rally on Wall Street in the previous session, when the Dow posted its best performance in a year after Washington and Tehran indicated they had agreed to pause hostilities for two weeks.
However, the role of Lebanon within the ceasefire arrangement has become a point of dispute. Iran has accused Israel of breaching the agreement through continued military operations in Lebanon.
Despite the ongoing strikes, Iranian negotiators are expected to arrive in Islamabad later today for “serious talks” with U.S. officials, with discussions tentatively planned for Saturday morning.
Adding to the uncertainty, U.S. President Donald Trump said Wednesday evening that American military forces would remain deployed around Iran until a “real agreement” is achieved, reiterating calls for Tehran to halt its nuclear program and reopen the Strait of Hormuz.
By 05:52 ET, S&P 500 Futures declined 0.3% to 6,782.81 points. Nasdaq 100 Futures also slipped 0.3% to 25,002.0 points, while Dow Jones Futures dropped 0.4% to 47,909.9 points.
“Since the [S&P 500] was struggling with 6900-7000 even before the war, that range is going to be even stronger resistance now,” Vital Knowledge analyst Adam Crisafulli said in a morning note.
Ceasefire tensions rise as Iran alleges violations
Although the United States and Iran initially signaled a willingness to implement a two-week ceasefire, Tehran on Wednesday accused both the U.S. and Israel of breaching multiple elements of its proposed 10-point peace framework.
A central dispute concerns Israel’s continued attacks in Lebanon, which Iran claims were supposed to be included within the ceasefire arrangement. The White House, however, has indicated that Lebanon was not part of the deal, while Israel has said it will continue targeting Hezbollah forces in the country.
Iranian officials warned that it would be “unreasonable” to move forward with peace negotiations with the United States if Lebanon is not included in the agreement. Media reports also indicated that Iran closed the Strait of Hormuz in response to Israel’s actions, after previously signaling that shipping would be allowed to continue during the ceasefire period.
Officials from the United States and Iran are expected to begin discussions in Pakistan later this week, though details of the agenda remain unclear. Tehran has also largely rejected Washington’s demands to halt uranium enrichment and surrender its existing uranium stockpiles.
Oil prices, which initially dropped on news of the ceasefire, recovered some ground on Wednesday evening.
Wall Street rallies on ceasefire optimism
U.S. equity markets posted strong gains on Wednesday as investors reacted positively to news of the temporary ceasefire, hoping it could mark a step toward ending nearly six weeks of conflict in the Middle East.
The S&P 500 climbed 2.5% to 6,782.96 points, while the Dow Jones Industrial Average surged 2.9% to 47,909.92 points, recording its strongest daily gain in a year. The NASDAQ Composite advanced 2.8% to 22,635.0 points, with technology stocks recovering further from the sharp losses recorded in March.
Semiconductor stocks led the gains, with the Philadelphia Semiconductor Index jumping more than 6% as shares of companies such as Micron Technology Inc (NASDAQ:MU), NVIDIA Corporation (NASDAQ:NVDA), and Intel Corporation (NASDAQ:INTC) moved higher. The sector was also supported after memory chip giant Samsung Electronics Co Ltd (USOTC:SSNHZ) projected strong first-quarter earnings.
Beyond developments related to the Iran conflict, investors also analyzed the minutes from the Federal Reserve’s March policy meeting, released Wednesday. The document showed policymakers increasingly concerned about rising oil prices and the potential impact on inflation and interest rates in the months ahead.