U.S. stock futures moved modestly lower on Monday after President Donald Trump dismissed Iran’s latest response to a U.S.-led peace proposal as “unacceptable,” weakening hopes for a near-term resolution to the conflict in the Middle East. Oil prices also continued climbing as investors reacted to renewed concerns over global energy supply disruptions.
Market participants were simultaneously tracking ongoing strength in artificial intelligence-linked equities while preparing for a week packed with important economic releases, including closely watched U.S. inflation data.
Futures Dip Following Another Record Week
As of 03:36 ET, Dow Jones futures were down 79 points, or 0.2%. Futures tied to the S&P 500 slipped 8 points, or 0.1%, while Nasdaq 100 futures declined 25 points, also by 0.1%.
The weaker futures follow another strong stretch for Wall Street, where both the S&P 500 and Nasdaq Composite reached fresh record highs and extended their winning streak to six straight weeks.
Recent gains have been supported in part by expectations that the Trump administration could still find a diplomatic path to end the conflict involving Iran, which has lasted for more than two months and disrupted global trade routes while raising concerns over broader economic stability. At the same time, enthusiasm surrounding artificial intelligence continues to fuel investor sentiment, driven by aggressive spending from major technology firms on expanding AI-related infrastructure and data centers.
“For stocks stateside, the bull case is simply one that’s too robust to fight right now, as geopolitical optimism combines with stellar earnings growth, and a return of euphoria around the AI theme,” said Michael Brown, Senior Research Strategist at Pepperstone, in a note.
“Unless and until any of those factors shift, the path of least resistance should continue to lead higher, with dips remaining relatively shallow for now, and likely being used as buying opportunities by most.”
Trump Rejects Iran’s Reply
Iranian state media reported that Tehran had submitted a response to the U.S. peace framework, focusing on ending military activity across all fronts while also requesting compensation for war-related damages.
Iran also reaffirmed its control over the Strait of Hormuz, the strategically critical shipping route through which around 20% of global oil supplies pass. The waterway has been heavily disrupted during the conflict and remains effectively restricted by both Iranian and U.S. forces.
Soon after reports of Iran’s response surfaced, Trump reacted on social media, writing: “I don’t like it — TOTALLY UNACCEPTABLE.” No additional explanation was provided.
Washington has been advocating for a rapid end to the war before moving into broader discussions on major issues, especially Iran’s nuclear programme.
Oil Prices Push Higher
Oil markets continued to rally as geopolitical uncertainty persisted, with crude prices remaining significantly above levels seen prior to the outbreak of the conflict.
Brent crude, the global oil benchmark, climbed 3.4% to $104.69 per barrel.
“One would expect the market to become increasingly fatigued by the deluge of headlines and the back-and-forth. However, oil prices remain highly sensitive to noise around Iran, highlighting the significance of the ongoing supply disruptions in the Persian Gulf,” analysts at ING wrote in a note.
Trump Expected to Visit China
Despite the latest diplomatic tensions, analysts suggested Trump’s upcoming trip to China could still support future negotiations.
Chinese state media reported that Trump is scheduled to visit China from May 13 to May 15 for talks with President Xi Jinping. The visit would mark the first major trip to Beijing by a U.S. president in nearly ten years and is intended to help stabilise relations between the world’s two largest economies.
In addition to discussions surrounding Iran, Trump and Xi are expected to address trade tariffs and tensions involving Taiwan. Reports also indicate that both countries may seek to extend the trade truce agreed last October.
Inflation Data Takes Centre Stage This Week
Investors are also turning their focus toward this week’s U.S. consumer price index release, which is expected to provide further clues on inflation trends.
The April CPI report, scheduled for release on Tuesday, could offer insight into how the conflict in the Middle East and rising energy prices are affecting inflationary pressures in the U.S. economy. In March, inflation accelerated sharply, driven largely by higher gasoline prices.
Economists expect annual headline inflation to rise to 3.7% in April from 3.3% previously. On a monthly basis, however, price growth is projected to slow to 0.6% from 0.9%.
Core CPI, which excludes food and energy prices, is forecast to increase modestly by 0.3%. Analysts remain focused on whether elevated oil prices will begin feeding through into a wider range of consumer goods and services beyond fuel costs.
