U.S. stock index futures pointed to a stronger open on Monday, with investors expected to build on last week’s gains as a sharp decline in crude oil prices improved overall market sentiment.
The drop in oil followed renewed optimism over diplomatic efforts in the Middle East after U.S. President Donald Trump announced he had called off a planned military strike against Iran.
Trump Signals Potential Diplomatic Breakthrough
In a post on Truth Social, Trump said the United States had decided to suspend military action after receiving requests from Iran and other countries in the region to allow negotiations to continue.
“We have just been asked by Iran, and other Middle Eastern Countries, to hold off any attack in that the perimeters of a deal has been agreed to,” Trump said. “This would include the Immediate, Complete, and Total OPENING OF THE HORMUZ STRAIT, and an end to Iran’s nuclear threat.”
He added, “Based on this request, I have agreed, for the future benefit of the WORLD and, likewise, the survival of a successful and prosperous Iran, to cancel the attack, subject to being able to rapidly make a DEAL.”
The announcement pushed U.S. crude futures down by nearly 7%, easing concerns about further disruptions to global energy supplies.
Investors Remain Cautious Ahead of Jobs Data
Despite the positive reaction in futures markets, traders are likely to remain cautious given the fragile history of previous ceasefire efforts between the United States and Iran.
Attention is also turning to Friday’s U.S. employment report, one of the week’s most important economic releases, which could influence expectations for future Federal Reserve policy decisions.
Wall Street Closed Last Week on a Strong Note
U.S. equities finished Friday’s session firmly higher after recovering from a subdued start.
The Nasdaq rose 251.68 points, or 1.0%, to 25,373.85, while the S&P 500 added 52.09 points, or 0.7%, to close at 7,489.72. The Dow Jones Industrial Average advanced 276.97 points, or 0.5%, ending the session at 52,485.03.
For the week, the Nasdaq gained 1.5%, while both the S&P 500 and Dow posted advances of more than 1%.
Amazon Leads Technology Rally
Amazon (NASDAQ:AMZN) was among Friday’s standout performers, with shares soaring 15.3% to their highest closing level in two months after the company reported stronger-than-expected second-quarter revenue and cloud computing growth.
The improvement in broader market sentiment was also supported by oil prices retreating from their earlier highs after initially surging on reports that Iran had attacked two tankers travelling through the Strait of Hormuz under U.S. military protection.
Treasury Yields Rise on Inflation Concerns
Government bond yields continued to climb despite the equity rally, with the benchmark 10-year Treasury yield reaching its highest level since early 2025.
The move reflected both higher energy prices earlier in the session and comments from Federal Reserve officials supporting tighter monetary policy.
In explaining his vote for a rate increase, Minneapolis Fed President Tushar Kashkari said inflation remains well above the central bank’s target.
“If inflation remains elevated, in my view, a potential series of small policy moves would be better than waiting and eventually concluding that even bolder actions were necessary,” Kashkari said.
He added, “On the other hand, if inflation durably fades, a strategy of small policy steps would allow the FOMC to slow or pause subsequent adjustments without unnecessary impact on the real economy.”
Cleveland Fed President Beth Hammack also defended raising rates.
“The longer that high inflation persists, the more challenging and costly it can be to bring it back down,” Hammack said. “I preferred to move at our recent meeting because I did not see the current policy stance as appropriately restrictive.”
Retail Stocks Outperform While Gold Miners Decline
Retail stocks led Friday’s gains, with the Dow Jones U.S. Retail Index climbing 6.6% to its highest closing level in two months, helped by Amazon’s strong performance.
Oil service companies also advanced as higher crude prices earlier in the session lifted the Philadelphia Oil Service Index by 2.5%.
Networking stocks joined the rally, with the NYSE Arca Networking Index gaining 2.2%.
Meanwhile, gold mining companies came under pressure as bullion prices weakened, dragging the NYSE Arca Gold BUGS Index lower. Biotechnology stocks also underperformed, with the NYSE Arca Biotechnology Index falling 2.9%.