U.S. stock index futures edged lower in early trading Thursday as investors assessed whether the tentative two-week ceasefire in the Iran conflict will hold, following signs of strain in the fragile agreement.
The modest decline comes after a powerful rally on Wall Street in the previous session, when the Dow recorded its strongest daily gain in a year after Washington and Tehran indicated they had agreed to pause hostilities for two weeks.
However, disagreements over Lebanon’s role in the ceasefire have emerged, with Iran accusing Israel of breaching the agreement through continued strikes in the country.
Despite the ongoing attacks, Iranian negotiators are expected to arrive in Islamabad later today for “serious talks” with U.S. officials, with discussions tentatively scheduled for Saturday morning.
Adding to the uncertainty, U.S. President Donald Trump said Wednesday evening that American military forces would remain positioned around Iran until a “real agreement” is secured, repeating his demands that Tehran halt its nuclear activities and reopen the Strait of Hormuz.
By 05:52 ET, S&P 500 Futures were down 0.3% at 6,782.81 points. Nasdaq 100 Futures also fell 0.3% to 25,002.0 points, while Dow Jones Futures declined 0.4% to 47,909.9 points.
“Since the [S&P 500] was struggling with 6900-7000 even before the war, that range is going to be even stronger resistance now,” Vital Knowledge analyst Adam Crisafulli said in a morning note.
Iran accuses U.S., Israel of ceasefire violations
Although the United States and Iran initially signaled willingness to observe a two-week ceasefire, Tehran on Wednesday accused both Washington and Israel of breaching several points of its proposed 10-point peace plan.
One of the key disputes involves Israel’s continued strikes in Lebanon, which Iran says were supposed to fall under the ceasefire terms. The White House, however, has indicated Lebanon was not included in the agreement, while Israel has said its campaign against Hezbollah forces will continue.
Iranian officials warned it would be “unreasonable” to proceed with peace negotiations with the United States unless Lebanon is included in the arrangement. Reports also indicated that Iran closed the Strait of Hormuz in response to Israeli operations, after earlier suggesting that shipping would continue during the two-week ceasefire.
Officials from Washington and Tehran are expected to begin talks in Pakistan later this week, although the precise agenda remains unclear. Iran has also largely rejected U.S. demands that it halt uranium enrichment and surrender its uranium stockpile.
Oil prices, which initially fell on news of the ceasefire, recovered some of their losses Wednesday evening.
Wall Street jumps on ceasefire optimism
U.S. equity markets posted strong gains Wednesday after the ceasefire announcement raised hopes that nearly six weeks of conflict in the Middle East could begin to ease.
The S&P 500 rose 2.5% to 6,782.96 points, while the Dow Jones Industrial Average surged 2.9% to 47,909.92 points, marking its best daily performance in a year. The NASDAQ Composite climbed 2.8% to 22,635.0 points, with technology shares recovering further from the steep losses seen in March.
Semiconductor stocks led the rally, with the Philadelphia Semiconductor Index jumping more than 6% as shares of Micron Technology Inc (NASDAQ:MU), NVIDIA Corporation (NASDAQ:NVDA), and Intel Corporation (NASDAQ:INTC) advanced. The sector also received a boost after memory chip giant Samsung Electronics Co Ltd (USOTC:SSNHZ) projected strong first-quarter earnings.
Beyond the developments in the Iran conflict, investors also reviewed the minutes from the Federal Reserve’s March policy meeting, released Wednesday. The document showed policymakers increasingly concerned about rising oil prices and the potential impact on inflation and interest rates in the months ahead.
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