U.S. futures signal rebound after last week’s sell-off
U.S. stock index futures traded higher on Monday, pointing to a positive start for Wall Street after markets ended last week with two consecutive sessions of heavy losses.
Investors appeared willing to return to equities following the recent pullback, with technology shares expected to lead the recovery. Nasdaq 100 futures climbed 0.9%, reflecting renewed optimism after sharp declines across the sector.
Falling oil prices lift investor confidence
Market sentiment also improved as oil prices retreated from earlier highs. Brent crude briefly traded above $90 a barrel before easing after comments from Iran suggested there may still be room for diplomatic negotiations.
Iranian Foreign Ministry spokesperson Esmail Baghaei said Tehran could pursue talks based on national interests after the United States carried out its ninth straight night of strikes against Iran.
“Oil prices have pulled back from their overnight highs on reports that Iran has received new proposals for negotiations, raising hopes that diplomatic channels remain open despite the recent escalation in hostilities,” said Daniela Hathorn, Senior Market Analyst at Capital.com.
She added, “While the conflict remains far from resolved, the prospect of renewed talks has eased immediate concerns over further disruptions to oil supply and shipping through the Strait of Hormuz.”
Technology stocks remained under pressure last week
Wall Street finished Friday sharply lower, extending losses as investors continued to reduce exposure to technology stocks.
The Nasdaq dropped 361.70 points, or 1.4%, to 25,520.24. The S&P 500 lost 76.08 points, or 1.0%, to 7,457.69, while the Dow Jones Industrial Average fell 406.55 points, or 0.8%, to 52,146.42.
Over the course of the week, the Nasdaq declined 2.9%, the S&P 500 fell 1.6% and the Dow slipped 0.9%.
Netflix (NASDAQ:NFLX) was among the weakest performers after its shares dropped 7.3% despite reporting quarterly results that largely met expectations, as investors reacted negatively to its third-quarter outlook.
Attention is now turning to earnings from Alphabet (NASDAQ:GOOGL), IBM Corp. (NYSE:IBM), Tesla (NASDAQ:TSLA) and Intel (NASDAQ:INTC), while elevated valuations across AI and semiconductor companies continue to be closely watched.
“With sentiment brittle, investors are becoming increasingly wary of valuations in the AI and technology sector – most notably in the memory chip space where share prices have surged to unprecedented levels this year. AJ Bell investment director Russ Mould.
Airlines, brokers and chipmakers led declines
Friday’s surge in crude oil prices, driven by escalating Middle East tensions, weighed on several sectors across the market.
Airline shares came under heavy selling pressure, pushing the NYSE Arca Airline Index down 3.5%, while the NYSE Arca Broker/Dealer Index lost 2.3%.
Semiconductor stocks also weakened, sending the Philadelphia Semiconductor Index down 1.6% to its lowest closing level in nearly two months.
Housing, software and retail stocks also finished lower, whereas oil producers and computer hardware companies outperformed.
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