U.S. stock index futures are pointing to a stronger open on Tuesday, suggesting equities could extend gains after a solid rally in the previous session.
The positive tone in markets is being driven in part by renewed optimism over a possible second round of negotiations between the U.S. and Iran aimed at resolving the Middle East conflict.
President Donald Trump said on Monday that Washington had been approached by Tehran about restarting talks, stating, “They’d like to make a deal very badly.”
Hopes of renewed diplomacy have helped push oil prices lower, with U.S. crude futures falling more than 3%.
“Previously, the narrative was straightforward: the longer the war dragged on, the worse the outlook for growth, inflation and risk assets,” said Daniela Hathorn, Senior Market Analyst at Capital.com. “Now, the dynamic appears to have flipped.”
“With a ceasefire framework still loosely in place and the US attempting to control the Strait, the absence of escalation, rather than the presence of conflict, is being treated as a positive signal,” she added. “In other words, each day without a major disruption to Gulf energy infrastructure is being read as incremental progress toward stabilization.”
Additional support for sentiment came from fresh economic data. A report from the U.S. Department of Labor showed producer prices rose less than expected in March.
The producer price index for final demand increased by 0.5% during the month, matching a revised figure for February. Economists had forecast a sharper 1.2% rise compared to the originally reported 0.7% gain in the prior month.
On an annual basis, producer price growth accelerated to 4.0% from 3.4% in February, though this was still below expectations of 4.6%.
Markets had initially opened lower on Monday, but sentiment improved throughout the day, driving a strong rebound. By the close, all major indices had moved firmly into positive territory and continued to climb into the final hours of trading.
The Nasdaq rose 280.84 points, or 1.2%, to 23,183.74, the S&P 500 gained 69.35 points, or 1.0%, to 6,886.24, and the Dow Jones Industrial Average added 301.68 points, or 0.7%, to 48,218.25.
Investors remained focused on geopolitical developments after weekend talks between the U.S. and Iran failed to produce a breakthrough.
“They have chosen not to accept our terms,” said JD Vance during a brief press conference, while leaving open the possibility of further negotiations. Iranian officials said that “unreasonable U.S. demands” had stalled progress.
Markets largely brushed aside news that President Trump had ordered a blockade of maritime traffic to and from Iranian ports.
U.S. Central Command confirmed the measure would apply to vessels of all nations entering or leaving Iranian ports and nearby coastal areas, including those along the Arabian Gulf and Gulf of Oman.
“Effective immediately, the United States Navy, the Finest in the World, will begin the process of BLOCKADING any and all Ships trying to enter, or leave, the Strait of Hormuz,” Trump said in a post on Truth Social.
Trump also stated that U.S. forces are “locked and loaded” and ready to “finish up the little that is left of Iran” at an “appropriate moment.”
While these developments initially pushed oil prices higher, investors appear to be betting that tensions will ultimately ease and a broader conflict will be avoided.
Attention is also shifting toward the start of the earnings season, with expectations that corporate results will remain resilient despite geopolitical risks.
In sector moves, software stocks rebounded strongly, lifting the Dow Jones U.S. Software Index by 4.6%. Computer hardware stocks also gained, with the NYSE Arca Computer Hardware Index rising 4.4%.
Brokerage firms saw notable gains as well, driving the NYSE Arca Broker/Dealer Index up 2.9%.
Transportation, semiconductor, and networking stocks also advanced, while utilities and natural gas sectors lagged behind.