US equity futures advanced on Monday, suggesting Wall Street could recover some of last week’s losses as investors responded to lower oil prices and renewed hopes for diplomatic progress in the Middle East.
The expected gains follow a difficult period for American equities, with the Nasdaq ending Friday at a three-month closing low and the S&P 500 recording its weakest finish in more than a month.
US crude futures dropped below $100 a barrel after reports indicated that Washington could allow further diplomatic efforts with Iran before considering additional military action.
Diplomatic Developments Ease Oil Supply Concerns
US Secretary of State Marco Rubio said President Donald Trump remained interested in resolving the conflict with Iran through negotiations rather than further military action.
“But we would prefer to do it peacefully,” Rubio said, while acknowledging that military capabilities remained available.
Talks involving Iranian representatives and Qatari intermediaries have also encouraged expectations that an agreement could eventually reduce regional tensions.
The resulting decline in crude prices may provide some support for equities by easing concerns about energy costs and potential economic disruption.
Nevertheless, investors face several important events this week, including quarterly results from Apple (NASDAQ:APPL) and Advanced Micro Devices (NASDAQ:AMD), as well as Tuesday’s US midterm elections.
Technology Weakness Drives Wall Street’s Latest Decline
Friday’s session produced substantial losses across the major US indices.
The Nasdaq dropped 747.73 points, or 2.9%, to 25,437.00, while the S&P 500 declined 140.32 points, or 1.8%, to 7,580.07.
The Dow Jones Industrial Average fell 572.25 points, equivalent to 1.1%, closing at 51,770.31.
The declines left the Nasdaq down 2% for the week, compared with losses of 0.9% for the Dow and 0.6% for the S&P 500.
Technology companies were particularly affected as investors questioned whether spending on artificial intelligence infrastructure would deliver sufficient financial returns.
Intel (NASDAQ:INTC) lost nearly 29% after its fourth-quarter outlook disappointed investors, despite stronger-than-expected third-quarter earnings.
Amazon (NASDAQ:AMZN) declined 1.4% after reporting quarterly revenue and earnings below market forecasts, together with negative free cash flow.
AI Investment Returns Become a Growing Market Concern
Daniela Hathorn, Senior Market Analyst at Capital.com, said investors were increasingly demanding evidence that substantial AI investment could translate into stronger financial performance.
“Companies need to demonstrate that substantial capital expenditure is translating into sustainable revenue growth, margins and free cash flow,” Hathorn said.
She also noted that Apple’s forthcoming earnings could be particularly influential because the company has less exposure to large-scale AI infrastructure spending than several other major technology groups.
Strong results could help restore confidence in the sector, while disappointing forecasts could extend the recent weakness.
Selling pressure on Friday affected computer hardware, semiconductor and networking companies.
The NYSE Arca Computer Hardware Index declined 7.6%, the Philadelphia Semiconductor Index fell 7.2% and the NYSE Arca Networking Index lost 5.2%.
Gold-related equities also weakened, with the NYSE Arca Gold Bugs Index dropping 5.6%.
Energy companies were among the few areas showing resilience. Chevron (NYSE:CVX) and Exxon Mobil (NYSE:XOM) gained following substantial increases in quarterly profits.
Outlook
Monday’s expected gains suggest investors are reassessing opportunities following the recent decline in technology shares.
Lower oil prices and renewed diplomatic activity could improve sentiment, but uncertainty over corporate earnings, AI spending and US political developments remains significant.
The next round of technology earnings will be closely watched for evidence that companies can maintain growth while managing investment costs and protecting cash flow.
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