Wall Street futures edged higher on Tuesday as traders returned from the Memorial Day holiday to evaluate escalating military tensions between the United States and Iran. Despite the latest hostilities, markets remained relatively stable, although confidence in a near-term peace agreement between Washington and Tehran weakened noticeably.
U.S. futures gain despite mounting Middle East tensions
By 03:42 ET, Dow Jones Industrial Average futures were up 281 points, or 0.6%, while S&P 500 futures climbed 0.6% and Nasdaq 100 futures advanced 0.8%.
Analysts at ING said “The market looks minded to continue pricing de-escalation in the Middle East – notwithstanding some occasional surgical strikes from the U.S.”
U.S. equity markets were closed on Monday for the Memorial Day holiday after a strong finish last week, when the Dow Jones Industrial Average reached another record closing high. Investors continue to monitor geopolitical developments alongside enthusiasm surrounding artificial intelligence and a resilient corporate earnings season.
Fresh exchanges between Washington and Tehran raise uncertainty
The U.S. military carried out what it described as “defensive” strikes in southern Iran, reportedly sinking two vessels belonging to the Islamic Revolutionary Guard Corps that were allegedly attempting to place mines in the Strait of Hormuz.
Iran responded by firing missiles at U.S. aircraft, while additional American strikes later targeted missile launch systems near Bandar Abbas, according to a report by the Wall Street Journal citing a U.S. official.
Recent optimism over a potential agreement to end the nearly three-month conflict between Washington and Tehran has faded. U.S. Secretary of State Marco Rubio said negotiations with Iran could “take a few days,” adding that the Strait of Hormuz would eventually reopen “one way or the other.”
Over the weekend, reports suggested both sides had agreed in principle to a deal, while Donald Trump later said discussions were progressing “nicely.” However, Trump also warned that military action could resume and intensify if negotiations fail.
Crude prices rebound as focus returns to Strait of Hormuz
Oil prices moved back into positive territory, recovering part of Monday’s sharp decline following reports of diplomatic progress tied to reopening the Strait of Hormuz.
Brent crude futures, the global oil benchmark, rose 2.4% to $98.39 per barrel after briefly slipping below the $100 mark earlier in the week.
Even after the recent pullback, Brent remains significantly above pre-conflict levels near $70 per barrel, keeping concerns over energy-driven inflation firmly on investors’ radar.
Market attention remains centred on the Strait of Hormuz, a strategically vital shipping route through which roughly one-fifth of global oil supplies pass. Tanker traffic has been heavily disrupted since the joint U.S.-Israeli offensive against Iran began in late February.
Stronger dollar pressures gold prices
The U.S. dollar continued to benefit from safe-haven demand amid the geopolitical uncertainty, helped by the view that the American economy, as a major energy exporter, may be better insulated from rising oil prices than many of its peers.
The U.S. dollar index, which tracks the currency against a basket of six major rivals, has gained 1.3% over the past three months, although it eased 0.2% on Tuesday.
Gold prices weakened as a stronger dollar made bullion more expensive for international buyers, while concerns over energy-driven inflation raised expectations that central banks could keep interest rates elevated for longer — a traditionally negative environment for non-yielding assets such as gold.
Spot gold fell 0.8% to $4,533.55 an ounce at 04:09 ET.
Lenovo shares surge on strong AI-led earnings growth
Elsewhere, shares in Lenovo Group reached record highs after the company delivered quarterly earnings that exceeded expectations, supported by strong demand for AI servers and improving conditions in the personal computer market.
Lenovo’s Hong Kong-listed shares climbed as much as 18% during the session before ending the day 15.1% higher at HK$18.13. Revenue for the quarter ended March rose to $21.6 billion, while net profit surged 479% to $521 million.
The company’s Infrastructure Solutions division, which includes AI servers and data-centre products, posted revenue growth of 37%, making it Lenovo’s fastest-growing business segment amid rapidly expanding global demand for artificial intelligence computing infrastructure.
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