U.S. stock futures pointed to a modestly positive start on Monday, with investors encouraged by reports of progress in diplomatic negotiations between the United States and Iran and by a continued decline in oil prices.
The positive tone follows strong gains recorded during the previous trading session, although investors remain cautious as they await further confirmation that the fragile peace process can be sustained.
Lower Oil Prices Support Risk Appetite
A sharp pullback in crude oil prices has helped improve market sentiment, easing concerns about inflation and potential economic disruption linked to the conflict in the Middle East.
The decline comes after negotiators from Washington and Tehran reported constructive discussions in Switzerland, raising hopes that a longer-term agreement could be reached.
Lower energy prices are also seen as supportive for consumers, businesses and central banks, potentially reducing pressure on interest rates.
U.S. and Iranian Officials Report Progress
Vice President JD Vance said the negotiations had made “great progress” despite a “little bit of threatening” and a “little bit of whining.”
Vance also described Iran’s decision to permit inspectors from the International Atomic Energy Agency (IAEA) to return as a “major milestone for the American people, and the first step in permanently denuclearizing or permanently ending a nuclear weapons program in Iran.”
Qatari and Pakistani mediators echoed the optimistic tone, stating that “encouraging progress has been made” during the talks.
Investors Await Further Confirmation
Despite the positive developments, investors remain cautious as they look for clearer signs that the emerging peace framework will hold.
Trading activity may also remain restrained due to the absence of major U.S. economic releases at the start of the week.
Attention is increasingly shifting toward key inflation data due later in the week, which could influence expectations for Federal Reserve policy.
Strong Finish to Last Week
U.S. equities ended last Thursday’s session firmly higher after recovering from late-session weakness the previous day.
The Nasdaq led the advance, climbing 496.28 points, or 1.9%, to close at 26,517.93.
The S&P 500 gained 80.48 points, or 1.1%, finishing at 7,500.58, while the Dow Jones Industrial Average added 72.15 points, or 0.1%, to end at 51,564.70.
For the shortened holiday week, the Nasdaq advanced 2.4%, the S&P 500 gained 0.9%, and the Dow rose 0.7%.
Preliminary U.S.-Iran Agreement Lifts Markets
Investor sentiment was boosted by confirmation that the United States and Iran had signed a preliminary framework agreement aimed at ending the conflict in the Middle East.
U.S. President Donald Trump and Iranian President Masoud Pezeshkian approved a memorandum of understanding establishing a 60-day negotiation period to work toward a permanent settlement.
As part of the initial agreement, Iran will reopen the Strait of Hormuz while the United States will lift its naval blockade of Iranian ports.
The development has contributed to a substantial decline in oil prices, with crude futures moving closer to levels seen before the conflict began.
Falling Energy Prices Seen as Economic Positive
Russ Mould, investment director at AJ Bell, highlighted the broader implications of lower oil prices.
“That has huge significance for inflation and interest rates, as well as business, consumer and investor sentiment,” said Mould. “It takes the pressure off industries and households and is hugely positive for global economic growth.”
Intel Rally Sparks Semiconductor Strength
Technology stocks also received support from a surge in Intel (NASDAQ:INTC), whose shares jumped 10.6% to an intraday record high.
The move followed comments from President Trump on Truth Social indicating that Apple (NASDAQ:AAPL) had agreed to work with Intel on designing and manufacturing chips in the United States.
The rally helped propel semiconductor stocks higher, with the Philadelphia Semiconductor Index surging 6.4% to a record closing level.
Jobless Claims Edge Lower
Economic data released last week showed a modest improvement in the U.S. labour market.
According to the Labor Department, initial jobless claims declined by 4,000 to 226,000 in the week ended June 13.
Economists had expected claims to come in at 225,000.
The figures pointed to continued resilience in employment conditions despite ongoing economic uncertainty.
Airlines Benefit as Fuel Costs Fall
The drop in crude oil prices also boosted airline stocks, which are highly sensitive to fuel costs.
The NYSE Arca Airline Index climbed 3.8%, reflecting expectations of improved profitability if lower energy prices persist.
Computer hardware and housing-related shares also posted strong gains, while energy and gold stocks underperformed as investors rotated away from traditional defensive sectors.