U.S. stock futures are signaling a weaker start on Tuesday, indicating that equities may retreat after the strong gains recorded in the prior trading session.
The cautious tone comes as crude oil prices recover, with global benchmark Brent futures climbing back above the $100 per barrel mark.
Brent prices had fallen nearly 11% during Monday’s session after President Donald Trump said the United States and Iran had engaged in productive discussions aimed at resolving the conflict in the Middle East.
However, oil prices are now moving higher again as Israel and Iran continue to exchange strikes. Large explosions have been reported in Tehran and other cities, while Iranian officials denied that negotiations with the United States had taken place.
“Iranian people demand complete and remorseful punishment of the aggressors,” Iranian Parliament Speaker Mohammad Bagher Ghalibaf wrote in response to Trump’s comments.
He also said Trump’s recent statements “is used to manipulate the financial and oil markets and escape the quagmire in which the U.S. and Israel are trapped.”
Iran’s foreign ministry also rejected Trump’s remarks, saying they were “part of efforts to reduce energy prices and buy time” for possible military action.
With the conflict now in its 25th day and no immediate signs of easing, Saudi Arabia and the United Arab Emirates are moving closer to joining the fight against Iran, according to a report by the Wall Street Journal.
On Monday, U.S. equities surged early in the session before giving up part of their gains later in the day, although the major indices still finished firmly higher. The rebound followed Friday’s session, when markets had dropped to their lowest levels in several months.
Even though the major averages closed well below their intraday highs, they still posted solid gains. The Dow climbed 631.00 points, or 1.4%, to 46,208.47. The Nasdaq advanced 299.15 points, or 1.4%, to 21,946.76, while the S&P 500 added 74.52 points, or 1.2%, to end at 6,581.00.
The early rally on Wall Street came after Trump softened his earlier threat to “obliterate” Iran’s power plants if the Strait of Hormuz was not fully reopened.
In a post on Truth Social, Trump said the United States and Iran had held “very good and productive conversations regarding a complete and total resolution of our hostilities in the Middle East.”
Trump said he subsequently ordered the War Department to delay any strikes on Iran’s power plants and energy infrastructure for five days.
Later, speaking with CNBC’s Joe Kernen, the president said the United States is “very intent on making a deal with Iran,” after previously saying he was not interested in negotiations.
Trump had earlier threatened to “obliterate” Iran’s power plants if the Strait of Hormuz was not reopened within 48 hours.
Iran responded by warning that it would target energy and water infrastructure across the Gulf region if the United States followed through with its threat.
Buying interest faded somewhat as the day progressed after Iranian state media reported that the country’s foreign ministry denied holding negotiations with the United States.
Trump later told reporters that the United States was speaking with a “top person” in Iran whom he described as the “most respected,” though he acknowledged that the individual was not the new supreme leader, Mojtaba Khamenei.
Airline stocks were among the strongest performers, with the NYSE Arca Airline Index jumping 4.2% after closing at a four-month low last Friday.
Gold mining stocks also advanced, with the NYSE Arca Gold Bugs Index rising 3.4%, even as gold prices dropped sharply.
Networking stocks also moved higher, lifting the NYSE Arca Networking Index by 3%.
Steel, housing, oil service and computer hardware stocks also posted notable gains amid broad buying across Wall Street.
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