U.S. equity futures traded higher on Monday as investors reacted positively to signs of easing tensions between the United States and Iran, helping improve market sentiment ahead of one of the busiest weeks of the earnings season and a key Federal Reserve policy meeting.
Dow Jones futures rose 398 points, or 0.8%, while S&P 500 futures added 0.9%. Nasdaq 100 futures outperformed with a 1.4% gain, supported by renewed optimism surrounding technology stocks.
Investors await major earnings reports
Attention is now shifting toward quarterly results, with around one-third of S&P 500 companies due to report this week. Analysts expect overall earnings growth of roughly 26.5% compared with the same period last year.
The spotlight will fall on several of the largest technology companies, including Amazon (NASDAQ:AMZN), Meta Platforms (NASDAQ:META), Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL). Their earnings are expected to provide important clues about the sustainability of record investment in artificial intelligence infrastructure and whether those expenditures are translating into stronger financial performance.
Markets will also closely monitor Wednesday’s Federal Reserve meeting. Although geopolitical developments have added uncertainty to the inflation outlook, investors continue to expect policymakers to leave interest rates unchanged.
Geopolitical developments support risk appetite
The improvement in investor confidence follows a second consecutive day without renewed military action between the United States and Iran, reducing fears of a broader conflict that could disrupt global energy supplies.
Reports suggest President Donald Trump chose to delay further military operations while diplomatic efforts continue. Speaking to Fox News, U.S. Ambassador to the United Nations Mike Waltz said the administration is “giving talks some space.”
He added: “We’ve had both Oman and Iran, and a number of our other negotiators, engaged at every level, from the most senior levels all the way down to the technical level over the past few weeks, and particularly in the past few days.”
Iran has also indicated it will refrain from additional attacks provided the United States maintains its suspension of military operations.
Oil declines while AI investment remains in focus
Brent crude fell 6.8% to around $90.25 per barrel as concerns over potential supply disruptions eased. Investors had previously feared that conflict around the Strait of Hormuz and the Bab el-Mandeb Strait could significantly disrupt global energy markets.
Meanwhile, Nvidia (NASDAQ:NVDA) is reportedly discussing a financial guarantee worth approximately $250 billion for OpenAI’s planned Ohio data centre project. According to the Wall Street Journal, the development could ultimately exceed $500 billion in value and highlights the continued scale of investment flowing into artificial intelligence infrastructure.
Markets also welcomed the strong stock market debut of Chinese chipmaker CXMT Corp, whose shares surged around 500% following an $8.6 billion IPO, underlining continued investor appetite for AI-related businesses despite growing concerns over capital expenditure.
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