Wall Street futures point to a stronger open
U.S. stock futures traded higher on Monday, indicating Wall Street could begin the new week with gains after two consecutive sessions of sharp declines.
Investors appear to be taking advantage of lower share prices following last week’s sell-off, with technology stocks leading the expected rebound. Nasdaq 100 futures advanced 0.9%, suggesting renewed buying interest in the sector after recent weakness.
Oil retreat supports market sentiment
A pullback in oil prices also helped improve risk appetite. Although Brent crude briefly climbed above $90 per barrel earlier in the day, prices later eased after comments from Iran’s Foreign Ministry suggested diplomatic talks could still be possible.
Foreign Ministry spokesperson Esmail Baghaei said Tehran could pursue negotiations based on national interests, following the ninth consecutive night of U.S. strikes against Iran.
“Oil prices have pulled back from their overnight highs on reports that Iran has received new proposals for negotiations, raising hopes that diplomatic channels remain open despite the recent escalation in hostilities,” said Daniela Hathorn, Senior Market Analyst at Capital.com.
She added, “While the conflict remains far from resolved, the prospect of renewed talks has eased immediate concerns over further disruptions to oil supply and shipping through the Strait of Hormuz.”
Technology shares led Friday’s market decline
Wall Street ended sharply lower on Friday, extending losses from the previous session as technology stocks remained under pressure.
The Nasdaq fell 361.70 points, or 1.4%, to 25,520.24. The S&P 500 declined 76.08 points, or 1.0%, to 7,457.69, while the Dow Jones Industrial Average dropped 406.55 points, or 0.8%, to 52,146.42.
For the week, the Nasdaq lost 2.9%, the S&P 500 fell 1.6% and the Dow slipped 0.9%.
Netflix (NASDAQ:NFLX) was among the biggest drags on the market, tumbling 7.3% after reporting second-quarter results that largely matched expectations but issuing weaker-than-expected guidance for the third quarter.
Investors also remained cautious ahead of earnings reports from Alphabet (NASDAQ:GOOGL), IBM Corp. (NYSE:IBM), Tesla (NASDAQ:TSLA) and Intel (NASDAQ:INTC), while elevated valuations across AI and semiconductor stocks continued to weigh on sentiment.
“With sentiment brittle, investors are becoming increasingly wary of valuations in the AI and technology sector – most notably in the memory chip space where share prices have surged to unprecedented levels this year. AJ Bell investment director Russ Mould.
Airlines and chipmakers came under pressure
Selling broadened across the market as oil prices surged on Friday following renewed tensions in the Middle East after further U.S. strikes against Iran and retaliatory action by Tehran linked to the Strait of Hormuz.
Airline stocks were among the weakest performers, with the NYSE Arca Airline Index falling 3.5% as higher fuel costs weighed on the sector.
Brokerage firms also declined, pushing the NYSE Arca Broker/Dealer Index down 2.3%.
Within technology, semiconductor companies remained under pressure, sending the Philadelphia Semiconductor Index 1.6% lower to its weakest close in almost two months.
Housing, software and retail shares also posted notable declines, while oil producers and computer hardware companies outperformed.