U.S. equity futures signaled a firmer open on Wednesday, with markets looking to recover some of the ground lost over the past two sessions.
The improved tone follows news that President Donald Trump has opted to extend the ceasefire with Iran, prompting renewed buying interest.
Referring to Iran’s leadership as “seriously fractured,” Trump said on Truth Social that the U.S. would pause further military action until Iranian officials “come up with a unified proposal.”
At the same time, he emphasized that U.S. forces would continue enforcing a naval blockade on Iranian ports.
Tehran dismissed the ceasefire extension as “meaningless” and reiterated that the Strait of Hormuz will remain shut until the blockade is lifted.
Mahdi Mohammadi, adviser to parliamentary speaker Mohammad Bagher Ghalibaf, described the move as an attempt “to buy time for a surprise strike,” adding that the “losing side cannot dictate terms.”
Shortly after Trump’s remarks, Iran’s Revolutionary Guard Navy said it had detained two container vessels in the Strait of Hormuz over alleged “maritime violations.”
The back-and-forth between Washington and Tehran has injected uncertainty into markets, although investors remain cautiously optimistic about a potential diplomatic outcome.
Confidence is also being supported by a solid start to the corporate earnings season.
“Investors appear to be focusing more on the direction of risk — whether things are improving or deteriorating — rather than the absolute level of geopolitical tension,” said Daniela Hathorn, Senior Market Analyst at Capital.com.
“Earnings season is playing a key role in reinforcing this narrative,” she added. “Expectations for continued double-digit earnings growth remain intact, helping to justify elevated equity valuations even as macro risks persist.”
After a mild dip on Monday, U.S. stocks extended their losses on Tuesday. The major indices initially moved higher but reversed direction and ended the day solidly lower.
The Dow Jones Industrial Average fell 293.18 points, or 0.6%, to close at 49,149.38. The Nasdaq Composite dropped 144.43 points, or 0.6%, to 24,529.96, while the S&P 500 declined 45.13 points, or 0.6%, to 7,064.01.
The downturn on Wall Street was largely driven by a sharp rise in oil prices throughout the session.
U.S. crude futures extended Monday’s rebound, climbing more than 2.5% during the day.
The surge in oil helped offset the steep drop seen last Friday, which had been linked to concerns ahead of the ceasefire’s expiration.
In an interview with CNBC, Trump said he expects to “end up with a great deal” with Tehran, but also indicated that military action could resume if the ceasefire lapses.
Separately, the New York Times reported, citing a U.S. official, that Vice President JD Vance’s planned visit to Pakistan had been called off after Iran failed to respond to U.S. proposals.
Earlier in the session, markets drew support from upbeat corporate earnings reports.
Shares of UnitedHealth (NYSE:UNH) surged 7% after the health insurer posted stronger-than-expected quarterly results and raised its full-year outlook.
Homebuilder D.R. Horton (NYSE:DHI) climbed 5.8% following better-than-forecast first-quarter earnings.
Meanwhile, 3M (NYSE:MMM) slipped 1.9% despite beating earnings estimates, as its full-year guidance disappointed investors.
Markets were also buoyed by stronger-than-expected economic data. A Commerce Department report showed U.S. retail sales rose 1.7% in March, above expectations of 1.4%, following a revised 0.7% increase in February.
Excluding autos, retail sales jumped 1.9%, surpassing forecasts of 1.3%, after a 0.7% gain in the prior month.
On the sector front, gold stocks fell sharply alongside the price of bullion, with the NYSE Arca Gold Bugs Index dropping 6.4%.
Airline shares also came under pressure, reflected in a 4.3% decline in the NYSE Arca Airline Index.
Pharmaceuticals, commercial real estate, and utilities stocks showed notable weakness, while energy names advanced in line with higher crude prices.
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