U.S. equity futures indicate a strong start for markets on Wednesday, with major indexes expected to open significantly higher as investors react to geopolitical developments in the Middle East.
Sentiment has improved after reports that the United States, Israel and Iran have agreed to a two-week ceasefire, a move that is likely to spark buying interest when trading begins.
In a post on Truth Social late Tuesday, President Donald Trump said he would halt bombing and military attacks against Iran for two weeks, provided Tehran agrees to the full, immediate and safe reopening of the Strait of Hormuz.
Trump also said Washington had received a 10-point proposal from Iran that he believes represents a “workable basis on which to negotiate,” adding that the two-week pause could provide enough time to finalize and implement a broader agreement.
Iranian Foreign Minister Abbas Araghchi later signaled that Tehran would reopen the Strait of Hormuz for the same two-week period if attacks against Iran are stopped.
The development triggered a sharp drop in oil prices, with U.S. crude futures plunging more than 17 percent and falling well below the $100-per-barrel level.
“The positive market reaction is understandable as a two-week ceasefire raises hope for a complete end to the conflict,” said Dan Coatsworth, head of markets at AJ Bell.
“The ceasefire gives the world a moment to breathe and take stock of events,” he added. “Unfortunately, there is no guarantee that everything will return to normal.”
Stocks had begun Tuesday’s session under pressure but recovered through the afternoon, with the main indexes rebounding from their intraday lows before ending the day with mixed results.
The Nasdaq added 21.51 points, or 0.1 percent, to close at 22,017.85, while the S&P 500 edged up 5.02 points, or 0.1 percent, to 6,616.85. The narrower Dow Jones Industrial Average slipped 85.42 points, or 0.2 percent, finishing at 46,584.46.
Equities strengthened late in the session after Pakistani Prime Minister Shehbaz Sharif called on President Donald Trump to extend the deadline for Iran to reopen the Strait of Hormuz by two weeks in order to “allow diplomacy to run its course.”
In a message posted on X, Sharif also urged Iran to reopen the Strait of Hormuz for the same period as a “goodwill gesture.”
“We also urge all warring parties to observe a ceasefire everywhere for two weeks to allow diplomacy to achieve conclusive termination of war, in the interest of long-term peace and stability in the region,” Sharif said.
While the responses from Trump and Iran to Sharif’s proposal remain unclear, the statement helped calm investor fears about a further escalation after the president’s latest warnings.
Trump had previously threatened to strike Iran’s power plants and bridges if Tehran did not reach an agreement and reopen the Strait of Hormuz by 8 p.m. ET.
Escalating his rhetoric, Trump wrote in a Truth Social post, “A whole civilization will die tonight, never to be brought back again. I don’t want that to happen, but it probably will.”
The president also suggested that a “different, smarter, and less radicalized” leadership is now governing Iran and hinted that a dramatic change could occur.
“WHO KNOWS?” Trump wrote, adding to market uncertainty. “We will find out tonight, one of the most important moments in the long and complex history of the World.”
Among sectors, networking stocks posted strong gains during Tuesday’s session, pushing the NYSE Arca Networking Index up 2.4 percent to a record closing level.
Oil service companies also performed well, with the Philadelphia Oil Service Index rising 1.7 percent.
Transportation and semiconductor stocks also saw notable strength, while housing and telecom shares were among the day’s weaker performers.
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