U.S. stock futures were pointing higher early Monday as markets appeared poised to bounce back from Friday’s sharp decline, which was triggered by escalating tensions in the Middle East.
Futures tied to the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all suggested a stronger start to the trading week, with investors likely eyeing discounted entry points following last week’s geopolitical-driven downturn.
The sell-off on Friday followed Israeli airstrikes on Iranian military targets, including facilities reportedly tied to nuclear and ballistic missile programs. Iran retaliated by launching over 100 drones toward Israel. The attacks resulted in the deaths of at least three senior Iranian military officials and raised fears of broader regional instability, leading to a spike in oil prices on concerns about potential supply disruptions.
Despite continued hostilities between Israel and Iran over the weekend, investors seemed to be betting on containment of the conflict.
“Despite a weekend of violence between the two countries, investors showed no signs of panicking, judging by movements in financial markets on Monday,” said Russ Mould, investment director at AJ Bell. He also cautioned, “The Middle East conflict remains a fluid situation and there is the potential for markets to still experience sudden jolts if the tension escalates further.”
In addition to geopolitical developments, market participants are closely watching this week’s G7 summit in Canada, where world leaders are expected to discuss global trade issues. Investors are particularly interested in whether the talks yield progress ahead of the expiration of President Donald Trump’s 90-day pause on reciprocal tariffs, set to end early next month.
The Federal Reserve is also in focus, with its upcoming policy decision expected later this week. While no rate change is anticipated, traders will be parsing the Fed’s statement and updated projections for insights into the central bank’s outlook on interest rates and inflation.
On Friday, all three major indexes fell sharply. The Dow Jones sank 769.83 points, or 1.8%, to 42,197.79. The Nasdaq lost 255.66 points, or 1.3%, closing at 19,406.83, while the S&P 500 dropped 68.29 points, or 1.1%, to end at 5,976.97.
That decline erased gains from earlier in the week and pushed the indexes into negative territory for the week. The Dow ended down 1.3%, the Nasdaq slipped 0.6%, and the S&P 500 fell 0.4%.
Amid the geopolitical turmoil, former President Donald Trump weighed in on the escalating conflict via Truth Social, urging Iran to return to the negotiating table.
“There has already been great death and destruction, but there is still time to make this slaughter, with the next already planned attacks being even more brutal, come to an end,” Trump said. “Iran must make a deal, before there is nothing left, and save what was once known as the Iranian Empire. No more death, no more destruction, JUST DO IT, BEFORE IT IS TOO LATE.”
Elsewhere in the market, investors brushed off an encouraging update on consumer sentiment. The University of Michigan’s index for June surged to 60.5 from May’s reading of 52.2, well above the 53.5 economists had expected.
Despite the better-than-expected sentiment data, market weakness was widespread on Friday. Airline stocks were hit especially hard, with the NYSE Arca Airline Index sinking 4.3% to its lowest level in over a month. Semiconductor and computer hardware stocks also took a hit, with related indexes down more than 2.5%.
Sectors including housing, networking, and financials also underperformed, while energy and gold stocks managed to buck the trend and finish higher as investors sought refuge in commodities.
