Wall Street futures traded modestly higher on Tuesday as investors returned from the Memorial Day holiday to assess renewed military tensions between the United States and Iran. Despite the latest escalation, markets remained relatively resilient, although optimism surrounding a near-term peace agreement between Washington and Tehran weakened.
U.S. futures rise despite renewed conflict
By 03:42 ET, futures linked to the Dow Jones Industrial Average had gained 281 points, or 0.6%, while S&P 500 futures rose 0.6% and Nasdaq 100 futures advanced 0.8%.
Analysts at ING said “The market looks minded to continue pricing de-escalation in the Middle East – notwithstanding some occasional surgical strikes from the U.S.”
U.S. markets were closed on Monday for the Memorial Day holiday, following a strong session on Friday in which the Dow Jones Industrial Average reached another record closing high. Investor attention has remained focused on geopolitical developments, artificial intelligence-driven market enthusiasm and a solid corporate earnings season.
Washington and Tehran exchange further attacks
The U.S. military carried out what it described as “defensive” strikes in southern Iran, reportedly sinking two Islamic Revolutionary Guard Corps vessels accused of attempting to place mines in the Strait of Hormuz.
Iran responded by launching missiles toward U.S. aircraft, while subsequent American strikes targeted missile launch systems near Bandar Abbas, according to a Wall Street Journal report citing a U.S. official.
Recent optimism over a possible agreement to end the nearly three-month conflict between Washington and Tehran has faded. U.S. Secretary of State Marco Rubio said negotiations with Iran could “take a few days,” adding that the Strait of Hormuz would eventually reopen “one way or the other.”
Over the weekend, reports indicated both sides had agreed in principle to a deal, while Donald Trump later stated that discussions were proceeding “nicely.” However, Trump also warned that hostilities could resume and intensify if negotiations fail.
Oil rebounds as Strait of Hormuz remains under pressure
Crude oil prices moved higher, recovering part of Monday’s losses after reports of diplomatic progress linked to reopening the Strait of Hormuz.
Brent crude futures rose 2.4% to $98.39 a barrel after briefly dropping below the $100 mark earlier in the week. Despite the decline from recent peaks, Brent remains significantly above pre-conflict levels near $70 per barrel, keeping concerns over energy-driven inflation firmly in focus.
Investors continue to monitor the status of the Strait of Hormuz, a critical shipping route handling roughly one-fifth of global oil flows. Tanker traffic through the waterway has been severely disrupted since joint U.S. and Israeli military operations against Iran began in late February.
Dollar strengthens while gold weakens
The U.S. dollar has remained relatively strong amid the geopolitical uncertainty, supported by its traditional safe-haven status and the perception that the U.S. economy may be better positioned to absorb rising energy prices due to its role as a major energy exporter.
The U.S. dollar index has gained 1.3% over the past three months, although it edged 0.2% lower on Tuesday.
Gold prices came under pressure, as a stronger dollar makes bullion more expensive for overseas buyers and higher energy-driven inflation may encourage central banks to maintain elevated interest rates. Spot gold was down 0.8% at $4,533.55 an ounce at 04:09 ET.
Lenovo shares jump after strong AI-driven earnings
Elsewhere, shares in Lenovo Group climbed to record highs after the company reported stronger-than-expected quarterly earnings, driven by robust demand for AI servers and improving conditions in the personal computer market.
Hong Kong-listed Lenovo shares rose as much as 18% intraday before closing 15.1% higher at HK$18.13. Revenue for the March quarter increased to $21.6 billion, while net profit surged 479% to $521 million.
The company’s infrastructure solutions division, which includes AI servers and data-centre products, delivered 37% revenue growth, making it Lenovo’s fastest-growing segment amid accelerating global demand for artificial intelligence computing.