U.S. equity futures signaled a softer open on Monday, with markets poised to pull back after last week’s strong rally.
Renewed concerns over escalating tensions in the Middle East are weighing on sentiment after weekend negotiations between Washington and Tehran ended without a breakthrough.
“They have chosen not to accept our terms,” U.S. Vice President JD Vance said during a brief press appearance, while noting that discussions could still resume. Iran responded by blaming “unreasonable U.S. demands” for the lack of progress.
Oil’s sharp rebound is also expected to pressure equities early in the session, with crude futures climbing back above the $100-per-barrel mark.
The move higher follows comments from President Donald Trump, who said the U.S. would move to restrict shipping linked to Iran through the Strait of Hormuz after talks collapsed.
“Effective immediately, the United States Navy, the Finest in the World, will begin the process of BLOCKADING any and all Ships trying to enter, or leave, the Strait of Hormuz,” Trump wrote on Truth Social.
He also warned that U.S. forces are “locked and loaded” and ready to “finish up the little that is left of Iran” at an “appropriate moment.”
“Markets are once again being pulled between competing forces, with geopolitical escalation in the Middle East reintroducing uncertainty just as investors turn their focus toward the start of earnings season,” said Daniela Hathorn, Senior Market Analyst at Capital.com.
She added, “After a brief period of relief following ceasefire hopes, the breakdown in talks and the emergence of a ‘blockade of the blockade’ strategy by the US has pushed the narrative back toward duration risk: how long this conflict will last and how deeply it will impact the global economy.”
Stocks ended last week on a mixed note after a relatively subdued session on Friday, following a rebound on Thursday.
The Nasdaq Composite rose 80.48 points, or 0.4%, to close at 22,902.89, marking its highest finish in over a month. The S&P 500 slipped 7.77 points, or 0.1%, to 6,816.89, while the Dow Jones Industrial Average dropped 269.23 points, or 0.6%, to 47,916.57.
Despite the uneven finish, all three major indexes recorded solid weekly gains, driven largely by a strong midweek rally. The Nasdaq surged 4.7% over the week, the S&P 500 gained 3.6%, and the Dow rose 3.0%.
The Dow’s decline on Friday was partly due to weakness in Salesforce (NYSE:CRM), which fell 3.5%. Other blue chips, including Nike (NYSE:NKE), IBM (NYSE:IBM), and Verizon (NYSE:VZ), also moved lower.
Investors remain cautious as uncertainty lingers over whether the fragile ceasefire in the Middle East can hold.
Ahead of the weekend talks in Pakistan, Trump criticized Iran’s handling of oil shipments through the Strait of Hormuz, saying it was doing a “very poor job” and adding, “That is not the agreement we have!”
He also addressed reports that Iran was charging fees to tankers using the waterway, warning, “They better not be and, if they are, they better stop now!”
In a separate message, Trump said, “The Iranians don’t seem to realize they have no cards, other than a short term extortion of the World by using International Waterways. The only reason they are alive today is to negotiate!”
On the economic front, traders largely overlooked a report from the University of Michigan showing a sharp drop in consumer sentiment in April.
The index fell to 47.6 from 53.3 in March, well below expectations of 52.0 and marking a record low, as concerns about the Iran conflict and inflation weighed on confidence.
Separately, data from the U.S. Department of Labor showed consumer prices rose 0.9% in March, matching forecasts.
Sector performance was mixed overall.
Semiconductor stocks stood out, with the Philadelphia Semiconductor Index climbing 2.3% to a record closing high.
Gold and computer hardware shares also posted gains, while software, biotech, and healthcare stocks lagged.
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