U.S. stock index futures are signaling a strong gain at the open on Monday, indicating that equities could bounce back after the sharp losses recorded in recent sessions.
Investors may be tempted to re-enter the market following the recent downturn that pushed both the Nasdaq and the S&P 500 to their lowest closing levels in more than six months.
The improved outlook for markets follows comments from U.S. President Donald Trump, who stepped back from earlier warnings that the United States would “obliterate” Iran’s power plants if Tehran failed to reopen the Strait of Hormuz.
In a post on Truth Social, Trump said Washington and Tehran had held “very good and productive conversations regarding a complete and total resolution of our hostilities in the Middle East.”
He added that he had instructed the War Department to delay any military strikes on Iranian power plants and energy infrastructure for five days.
Previously, Trump had threatened that the United States would “obliterate” Iran’s power plants if the Strait of Hormuz was not reopened within 48 hours and said he had no interest in negotiating with Tehran.
Iran responded by warning it would target energy and water infrastructure throughout the Gulf if Washington carried out the threatened attacks.
Although oil prices fell sharply after Trump’s latest remarks, Iran’s state-linked Fars news agency later reported that Tehran was not engaged in direct negotiations with the United States, either directly or through intermediaries.
Wall Street extended losses on Friday
Stocks fell significantly during Friday’s session, adding to declines from earlier in the week and sending the Nasdaq and the S&P 500 to their lowest closing levels in more than six months.
Both the Dow and the Nasdaq briefly slipped into correction territory — defined as a drop of 10% from recent peaks — before trimming some of their losses late in the day.
Technology stocks led the retreat, with the Nasdaq falling 443.08 points, or 2.0%, to 21,647.61. The S&P 500 declined 100.01 points, or 1.5%, to 6,506.48, while the Dow Jones Industrial Average dropped 443.96 points, or 1.0%, to 45,577.47.
These declines erased the earlier strength seen at the start of the week. For the week as a whole, the S&P 500 fell 1.9%, while both the Dow and the Nasdaq lost 2.1%.
Oil volatility continues to steer markets
The downturn on Wall Street came amid ongoing volatility in oil markets, which has been a major driver of trading in recent days.
Crude oil for May delivery has fluctuated sharply during the session but was recently climbing nearly 3% in electronic trading.
Prices initially surged after reports of fresh attacks on energy facilities in the Middle East, but the gains faded after reports suggested Washington may consider easing sanctions on certain Iranian oil exports in order to boost supply and lower prices.
However, prices turned higher again following remarks from Trump during an interview with MS Now’s Stephanie Ruhle, in which he suggested the United States would continue striking Iran until it could “never rebuild.”
Trump later told reporters he was not interested in a ceasefire with Iran, saying, “You don’t do a ceasefire when you’re literally obliterating the other side.”
Despite the sharp swings in recent sessions, oil prices remain well above levels seen before the conflict began, raising concerns about inflation and the outlook for interest rates.
Data from CME Group’s FedWatch Tool currently suggests that the Federal Reserve is unlikely to cut rates this year, with some probability that borrowing costs could even rise by year-end.
Tech and rate-sensitive sectors under pressure
Computer hardware stocks were among the hardest hit on Friday. The NYSE Arca Computer Hardware Index fell 6.0% after closing at a record high in the previous session.
Super Micro Computer (NASDAQ:SMCI) led the sector’s losses, plunging 33.3% after U.S. prosecutors charged several employees of the company with smuggling Nvidia (NASDAQ:NVDA) chips into China.
Networking stocks also experienced heavy selling, with the NYSE Arca Networking Index dropping 4.6%. The index had also closed at a record high the day before.
Utilities — a sector sensitive to interest rates — also weakened significantly, sending the Dow Jones Utility Average down 3.7% to its lowest closing level in more than a month.
Gold miners, commercial real estate companies and airline stocks also posted notable losses amid the broad selling pressure across Wall Street.
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