U.S. equity futures traded higher on Tuesday, indicating a stronger start for Wall Street as investors reacted positively to a sharp decline in oil prices and continued to assess prospects for easing tensions in the Middle East.
The drop in energy prices provided early support for risk assets, with U.S. crude futures falling more than 2%.
Oil slipped below the $90-per-barrel mark after President Donald Trump suggested that a peace agreement between the United States and Iran could be reached within “two or three days.”
Trump also said the Strait of Hormuz would reopen “immediately” once an agreement is finalized, although previous predictions of a near-term breakthrough have yet to produce a formal deal.
The market may also continue to benefit from bargain-hunting activity after Friday’s broad-based sell-off left many stocks trading at reduced levels.
Stocks rebounded sharply at the start of Monday’s session following the previous week’s losses, but much of that momentum faded throughout the day. By the closing bell, the major indices had retreated significantly from their highs, with the Dow ending modestly lower.
The Nasdaq, which had gained as much as 1.8% intraday, finished up 220.23 points, or 0.9%, at 25,929.66. The S&P 500 rose 21.99 points, or 0.3%, to 7,405.73, while the Dow Jones Industrial Average slipped 80.77 points, or 0.2%, to 50,786.01.
Much of Monday’s early strength stemmed from investors stepping back into technology shares after Friday’s sell-off pushed the Nasdaq to its weakest close in a month.
However, buying activity slowed as traders monitored ongoing geopolitical risks, including reports that Israel and Iran exchanged missile strikes over the weekend.
Crude prices later eased after Trump stated that Israel and Iran were “looking to do an immediate ceasefire.”
“Final negotiations on ‘Peace’ are proceeding, subject to ignorance or stupidity getting in its way,” Trump said in a post on Truth Social. “The Blockade will remain in place, and in full force and effect, until a ‘Final Deal’ is reached. Things should move quickly.”
Semiconductor stocks remained a notable area of strength throughout the session. The Philadelphia Semiconductor Index climbed 5.6%, recovering part of the steep 10.3% decline recorded on Friday.
Marvell Technology (NASDAQ:MRVL) surged 9.6% after confirmation that the company will be added to the S&P 500, alongside electronics manufacturing services provider Flex (NASDAQ:FLEX).
Nvidia (NASDAQ:NVDA) gained 1.7% after announcing a long-term partnership with SK hynix focused on developing advanced memory technologies for AI infrastructure and speeding up semiconductor innovation.
Energy-related shares also performed well, with the Philadelphia Oil Service Index advancing 3.6%.
Oil producers and computer hardware companies ended the session among the strongest performers, while utilities and commercial real estate stocks lagged as Treasury yields continued to move higher.
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