U.S. stock index futures traded higher on Monday as investors reacted to renewed diplomatic efforts between the United States and Iran while preparing for another busy week of corporate earnings and economic data.
By 02:00 ET (06:00 GMT), Dow Jones futures had advanced 277 points, or 0.5%, S&P 500 futures were up 44 points, or 0.6%, and Nasdaq 100 futures had gained 239 points, or 0.8%.
Friday’s gains on Wall Street were led by technology stocks, with stronger-than-expected earnings from Amazon helping restore confidence in the artificial intelligence sector following mixed results from several other technology giants.
Technology Sector Continues to Drive Market Sentiment
Amazon’s strongest quarterly revenue growth in more than four years, together with robust results from Microsoft, helped offset investor disappointment following recent earnings from Apple and Meta Platforms.
The Philadelphia Semiconductor Index, which tracks major chipmakers serving the AI industry, edged 0.07% higher during the previous session, although it remains more than 20% below the record closing high reached in June.
According to John Higgins, Chief Economic Advisor at Capital Economics, investor confidence in artificial intelligence has weakened in recent months, but demand for the technology itself remains resilient.
“That may help to explain the rebound [late last week] in the share prices of some of the behemoths at the heart of the AI revolution,” Higgins wrote.
Markets Monitor Renewed U.S.-Iran Negotiations
Investor attention has shifted back to developments in the Middle East after U.S. President Donald Trump announced that a planned military strike on Iran had been cancelled in favour of renewed diplomatic negotiations.
Trump said the United States was engaging with Iran “in the form of negotiations… it starts tomorrow afternoon and we’ll see if it’s true.”
He also indicated that the framework for an agreement to reopen the Strait of Hormuz had been established after discussions involving Iran and several Middle Eastern countries.
However, analysts cautioned that previous ceasefire agreements have failed to deliver lasting stability. Researchers at Vital Knowledge noted that earlier diplomatic efforts had broken down only weeks after implementation.
Oil Prices Retreat as Supply Outlook Improves
Brent crude fell 5.1% to $83.44 per barrel after the diplomatic developments eased concerns over supply disruptions.
Additional downward pressure came after OPEC+ agreed to increase production by approximately 188,000 barrels per day, completing the reversal of production cuts introduced in 2023.
Although oil prices remain well above levels seen earlier in the year, lower crude prices have eased immediate concerns about energy-driven inflation ahead of the U.S. midterm elections.
ISM Manufacturing Data in Focus
Investors are also awaiting the latest U.S. manufacturing data from the Institute for Supply Management (ISM).
Economists expect the July manufacturing index to rise to 54.0 from 53.3 in June. Any reading above 50 indicates expansion in manufacturing activity, a sector accounting for just over 9% of the U.S. economy.
Manufacturing growth has now continued for six consecutive months, supported by ongoing investment in artificial intelligence infrastructure despite geopolitical uncertainty.
Palantir Results Expected After the Closing Bell
Attention later in the session will turn to Palantir Technologies (NASDAQ:PLTR), which is scheduled to report second-quarter earnings.
The data analytics company has benefited from strong demand for its AI software across both government and commercial customers. During the first quarter, Palantir reported record revenue of $1.63 billion, an increase of 85% compared with the previous year.
Its Maven AI platform continues to play an important role in U.S. defence operations, while management has forecast fiscal 2026 revenue of between $7.65 billion and $7.66 billion.
Despite its strong commercial momentum, analysts continue to monitor increasing competition from emerging AI companies such as Anthropic. Earlier this year, Palantir executives criticised rival products, referring to them as “AI slop.”
Shares of Palantir have fallen more than 26% since the beginning of the year.