US stock futures pointed to a higher opening on Monday as investors looked for buying opportunities following last week’s sharp declines, while falling crude oil prices and renewed diplomatic efforts in the Middle East helped improve market sentiment.
The anticipated recovery follows a difficult Friday session that pushed the Nasdaq to its lowest closing level in three months and the S&P 500 to its weakest close in more than a month.
US crude oil futures fell back below $100 per barrel amid growing expectations that diplomatic negotiations could ease tensions involving Iran and reduce concerns about global energy supplies.
Middle East Diplomacy Supports Market Sentiment
US Secretary of State Marco Rubio said President Donald Trump preferred a diplomatic resolution to the conflict with Iran, although military options remained available.
“But we would prefer to do it peacefully,” Rubio said.
Ongoing discussions involving Iranian officials and Qatari mediators have also raised hopes of progress towards an agreement.
The decline in oil prices could provide some relief to equity markets following the recent increase in energy costs.
However, investors remained cautious ahead of earnings announcements from Apple (NASDAQ:APPL) and Advanced Micro Devices (NASDAQ:AMD), alongside Tuesday’s US midterm elections.
Nasdaq Records Sharp Losses as Technology Shares Retreat
Wall Street ended Friday substantially lower, with the Nasdaq falling 747.73 points, or 2.9%, to 25,437.00.
The S&P 500 declined 140.32 points, or 1.8%, to 7,580.07, while the Dow Jones Industrial Average dropped 572.25 points, or 1.1%, to 51,770.31.
For the week, the Nasdaq lost 2%, the Dow declined 0.9% and the S&P 500 slipped 0.6%.
Technology stocks led the downturn as investors reassessed valuations and the financial returns associated with substantial artificial intelligence investment.
Intel (NASDAQ:INTC) plunged nearly 29% after issuing disappointing fourth-quarter guidance despite reporting better-than-expected third-quarter earnings.
Amazon (NASDAQ:AMZN) also fell 1.4% following quarterly earnings and revenue below analyst expectations, alongside negative free cash flow.
AI Spending and Corporate Earnings Remain in Focus
Daniela Hathorn, Senior Market Analyst at Capital.com, said investors were increasingly focused on whether significant AI expenditure could generate sustainable revenue, margins and cash flow.
“The message from investors is becoming clearer: strong AI demand is no longer enough on its own,” Hathorn said.
She also highlighted the importance of Apple’s upcoming results, given its comparatively limited exposure to large-scale AI infrastructure investment.
Stronger-than-expected earnings could support a recovery in technology shares, while disappointing guidance could renew selling pressure.
Friday’s decline extended across several technology-related industries. The NYSE Arca Computer Hardware Index fell 7.6%, while the Philadelphia Semiconductor Index and NYSE Arca Networking Index dropped 7.2% and 5.2%, respectively.
Gold mining stocks also weakened, with the NYSE Arca Gold Bugs Index declining 5.6%.
Energy shares provided some support, with Chevron (NYSE:CVX) and Exxon Mobil (NYSE:XOM) advancing following substantial increases in quarterly profits.
Outlook
Wall Street’s anticipated rebound reflects bargain hunting and lower oil prices following two sessions of heavy selling.
However, uncertainty surrounding technology earnings, AI investment returns, Middle East negotiations and the US midterm elections could limit gains.
Investors will be watching upcoming corporate results and geopolitical developments for indications of whether the recovery can be sustained.