U.S. equity futures traded modestly higher on Monday, pointing to a positive start for Wall Street even as fresh military exchanges between the United States and Iran cast doubt on efforts to secure a broader diplomatic agreement.
Meanwhile, oil prices advanced again, remaining elevated compared with levels seen before the conflict began, while investors also assessed reports that U.S. President Donald Trump is seeking revisions to a proposed agreement aimed at easing tensions in the region. In the technology sector, Nvidia (NASDAQ:NVDA) unveiled a new generation of processors designed to power Windows-based computers.
Wall Street Futures Build on Recent Gains
At 03:23 ET, Dow Jones futures were up 54 points, or 0.1%, while S&P 500 futures gained 20 points, or 0.3%. Nasdaq 100 futures outperformed with an increase of 135 points, equivalent to 0.4%.
The positive tone followed another strong session for U.S. equities at the end of last week, with major indices reaching fresh record closing levels. Technology shares led the advance, supported in part by Dell’s decision to raise its full-year revenue and profit guidance, which boosted confidence across the sector.
Market sentiment in recent weeks has also been supported by expectations that Washington and Tehran could eventually reach an agreement, reducing concerns that prolonged conflict would trigger an energy-driven slowdown accompanied by persistent inflationary pressures.
Fresh Military Action Clouds Diplomatic Progress
Despite ongoing negotiations, the latest developments in the Middle East highlighted the fragility of any potential agreement.
According to reports from the Associated Press, U.S. forces targeted Iranian radar installations and drone-control facilities after Tehran allegedly shot down an American drone over the weekend. Iran later confirmed that it had launched additional retaliatory strikes, while Kuwaiti authorities reported intercepting drones and missiles.
Elsewhere in the region, Israel has reportedly expanded military operations in parts of southern Lebanon following drone attacks attributed to Hezbollah.
President Donald Trump has continued to express confidence that Iran is interested in reaching an agreement, although negotiations remain focused on several unresolved issues, particularly those relating to Iran’s nuclear programme.
The White House is currently reviewing a proposed memorandum of understanding that would reportedly extend an existing ceasefire arrangement, support the reopening of shipping through the Strait of Hormuz and establish a framework for further nuclear discussions.
However, Iran’s lead negotiator indicated over the weekend that Tehran would reject any deal that fails to protect what it considers its national rights.
Oil Prices Rise as Hormuz Risks Persist
Brent crude futures continued their upward trend, climbing 3.1% to $93.92 per barrel by 03:56 ET.
Although hopes for a diplomatic breakthrough have prevented prices from revisiting recent highs above $100 per barrel, oil remains significantly more expensive than before the conflict began.
Analysts note that even if a formal agreement is reached, normal shipping operations through the Strait of Hormuz may take considerable time to recover. As a result, geopolitical risk premiums remain embedded in energy markets.
The strategic waterway handles a substantial portion of global oil and natural gas exports, making disruptions a major concern for energy consumers and policymakers worldwide.
Inflation and Interest Rate Concerns Remain in Focus
The conflict has had a growing influence on economic expectations, with investors weighing the risk of higher inflation against the possibility of weaker global growth.
Rising energy prices have increased speculation that central banks could be forced to maintain higher interest rates for longer or even tighten monetary policy further if inflation accelerates. Such an outcome could weigh on risk-sensitive assets, including equities.
ISM Manufacturing Report in Spotlight
Attention later on Monday will turn to the latest U.S. manufacturing data from the Institute for Supply Management.
Economists expect the ISM manufacturing purchasing managers’ index to rise to 53.3 in May from 52.7 in April. A reading above 50 indicates expansion in the sector.
Investors will also monitor the prices-paid component of the report, which is forecast to increase to 85.3 from 84.6. The figure is closely watched as an indicator of inflationary pressures within the manufacturing economy.
Nvidia Introduces New AI-Focused Windows Processor
Nvidia (NASDAQ:NVDA) attracted attention after unveiling a new processor platform aimed at powering next-generation Windows computers.
Chief Executive Jensen Huang introduced the new RTX Spark family of “superchips” during a keynote presentation at the COMPUTEX technology event in Taiwan.
The product range incorporates Nvidia’s new N1X processor, developed in partnership with Microsoft and designed alongside Taiwanese semiconductor company MediaTek. The chips are built using Arm-based architecture.
According to Huang, the processors are specifically designed to support locally hosted artificial intelligence applications and AI agents. He also noted that Nvidia worked closely with Microsoft to optimise the software ecosystem supporting the new hardware.
The launch marks another step in Nvidia’s efforts to extend its leadership in AI computing beyond data centres and into personal computers.