Futures for the major U.S. indexes—the Dow Jones, S&P 500, and Nasdaq—are pointing to a lower open on Tuesday as Wall Street looks poised to retreat after Monday’s strong rebound.
Investors seem ready to take profits following the prior session’s gains, which had been fueled in part by hopes of de-escalation in the ongoing conflict between Israel and Iran.
Although initial reports suggested the conflict might ease—sparking Monday’s rally—concerns resurfaced after news broke that President Donald Trump left the G7 summit early to focus on the situation, raising fears of further escalation.
In a Truth Social post, Trump clarified the reason for his departure, countering French President Emmanuel Macron’s assertion that he left to help negotiate a ceasefire.
“He has no idea why I am now on my way to Washington, but it certainly has nothing to do with a Cease Fire,” Trump said. “Much bigger than that.”
The pressure on markets also comes amid disappointing economic data from the Commerce Department, which showed U.S. retail sales dropped more than anticipated in May.
Retail sales decreased by 0.9% last month, following a revised 0.1% dip in April. Economists had forecast a smaller decline of 0.6% and were expecting a 0.1% increase for April, rather than the slight drop reported.
When excluding vehicle and parts dealers—who saw a sharp sales decline—retail sales fell 0.3% in May, after remaining flat in April. Economists had predicted a slight increase of 0.1% ex-auto.
Monday’s trading session saw stocks initially climb but then give up some gains, though the market still posted solid results. The strong bounce nearly erased the steep losses from Friday, driven by escalating tensions following Israel’s airstrikes on Iran.
By the close, all three major indexes were comfortably higher: the Nasdaq surged 294.39 points (1.5%) to 19,701.21, the S&P 500 rose 56.14 points (0.9%) to 6,033.11, and the Dow gained 317.30 points (0.8%) to 42,515.09.
The early strength on Monday reflected investors’ attempts to buy stocks at reduced prices after the prior session’s selloff triggered by Middle East hostilities.
Despite ongoing clashes over the weekend, optimism remains that the conflict might stay contained. The Wall Street Journal cited Middle Eastern and European officials reporting that Iran is urgently signaling a desire to end hostilities and resume nuclear talks.
“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 added, “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.”
Investors are also eyeing the upcoming G7 summit in the Canadian Rockies, where world leaders are expected to discuss trade progress ahead of the expiration of President Trump’s 90-day pause on “reciprocal tariffs” early next month.
Attention will also turn to the Federal Reserve’s next monetary policy announcement. While interest rates are widely expected to remain unchanged, traders will be looking for clues in the Fed’s statement and officials’ forecasts regarding the future path of rates.
In sector action, airline stocks staged a notable recovery, with the NYSE Arca Airline Index jumping 3.3% after several days of declines.
Semiconductor stocks also performed strongly, as the Philadelphia Semiconductor Index surged 3.0%.
Computer hardware, financials, and telecom sectors showed considerable gains, while pharmaceutical and oil services stocks lagged, bucking the broader market rally.
