Dow Jones, S&P 500 and Nasdaq futures are currently pointing to a lower open on Monday, with stocks likely to give back ground following the substantial rally seen last week.
Concerns about the re-escalation of tensions between the U.S. and Iran may weigh on the markets following the latest developments in the Middle East.
Over the weekend, Iran once again closed the Strait or Hormuz and purportedly fired on tankers in the vital waterway, blaming the U.S. blockade of Iranian ports for the moves.
President Donald Trump called Iran’s actions a “total violation” of the ceasefire agreement between the U.S. and Iran, which is currently set to expire this week.
In a post on Truth Social, Trump also said he is sending representatives to Islamabad, Pakistan, for talks with Iran, although Tehran has denied there are plans for a second round of negotiations.
Trump once again threatened to knock out every single power plant and bridge in Iran if the country refuses to make a deal.
The latest threats combined with news that U.S. forces have seized an Iranian-flagged cargo ship in the Gulf of Oman, have contributed to a significant rebound by the price of crude oil.
U.S. crude oil futures are currently surging by more than 5 percent but have given back ground after reaching a high above $90 a barrel.
Extending the strong upward move seen over the past several sessions, stocks moved sharply higher during trading on Friday. The Nasdaq and the S&P 500 once again reached new record closing highs, while the Dow reached its best closing level in almost two months.
The major averages ended the day off their highs of the session but still posted strong gains. The Dow surged 868.71 points or 1.8 percent to 49,447.43, the Nasdaq shot up 365.78 points or 1.5 percent to 24,468.48 and the S&P 500 jumped 84.78 points or 1.2 percent to 7,126.06.
For the week, the Nasdaq skyrocketed by 6.8 percent, the S&P 500 soared by 4.9 percent and the Dow spiked by 3.2 percent.
The rally on Wall Street came following news that Iran has declared the Strait of Hormuz completely open to commercial traffic on the heels of the 10-day ceasefire between Israel and Lebanon.
In a post on Truth Social, Trump said the Strait of Hormuz is “completely open and ready for business” but said the U.S. will continue its blockade of Iranian ports until a final peace agreement is reached.
The news of the temporary reopening of the strait led to a nosedive by the price of crude oil, with U.S. crude oil futures plummeting by more than 10 percent and dropping well below $90 a barrel.
The markets also continued to benefit from optimism about the potential end of the U.S. war with Iran following the latest comments by Trump.
At an event in Las Vegas on Thursday, Trump claimed the “war in Iran is going along swimmingly” and “should be ending pretty soon.”
Trump’s latest remarks echo similar optimistic predictions he has made throughout the war, but his comments continue to generate positive sentiment on Wall Street.
The strength on Wall Street may also have reflected optimism about the strength of corporate earnings ahead of the release of quarterly results from several big-name companies this week.
However, shares of Netflix (NASDAQ:NFLX) plunged by 9.7 percent after the streaming giant reported better than expected first quarter results but provided disappointing second quarter guidance.
Airline stocks turned in some of the market’s best performances on the day, with the NYSE Arca Airline Index soaring by 6.4 percent to its best closing level in well over a month.
Substantial strength was also visible among housing stocks, as reflected by the 3.7 percent spike by the Philadelphia Housing Sector Index (NASDAQI:HGX).
Gold stocks also moved sharply higher along with the price of the precious metal, resulting in a 3.2 percent surge by the NYSE Arca Gold Bugs Index.
Steel, networking and semiconductor stocks also saw considerable strength, while oil producer stocks showed a significant move to the downside.