U.S. stock futures climbed sharply on Sunday evening as oil prices fell following a pause in hostilities between the United States and Iran.
Investor sentiment also improved ahead of a major week for financial markets, with the Federal Reserve preparing to announce its latest interest rate decision and several leading technology companies due to report earnings.
S&P 500 and Nasdaq Futures Move Higher
S&P 500 futures gained 0.9% to reach 7,515.75 points by 02:42 ET, or 06:42 GMT.
Nasdaq 100 futures advanced 1.5% to 28,703.25 points, while Dow Jones futures rose 0.8% to 52,547 points.
The gains suggested that Wall Street could open higher as falling oil prices reduced immediate concerns about inflation and economic disruption.
Wall Street Recorded Weekly Losses
U.S. stock indexes ended Friday’s session with mixed results. However, all three major benchmarks posted declines for the week.
The Nasdaq Composite fell approximately 2.1%, while the S&P 500 dropped 0.6%. The Dow Jones Industrial Average declined by around 0.4%.
Technology shares faced particular pressure as investors became more cautious about rising artificial intelligence spending and broader geopolitical risks.
US and Iran Pause Military Attacks
The improvement in market sentiment followed a weekend pause in military action between the United States and Iran.
After 13 consecutive nights of U.S. strikes on Iranian targets, President Donald Trump suspended the bombing campaign late on Friday to allow diplomatic discussions to continue.
No additional U.S. attacks were reported on Saturday or Sunday. Iran also avoided launching retaliatory strikes against neighboring countries hosting American military bases during the weekend.
The pause reduced fears that the conflict could expand and threaten energy supplies across the Middle East.
Oil Prices Drop More Than 5%
Oil prices fell by more than 5% during Asian trading on Monday as concerns about disruptions through the Strait of Hormuz eased.
The waterway is a critical route for global oil shipments. Any prolonged disruption could reduce supply and push energy prices sharply higher.
The decline in oil prices helped calm fears that another increase in energy costs could drive inflation higher and complicate the Federal Reserve’s monetary policy decisions.
Lower oil prices may also support consumer spending by reducing fuel and transportation costs.
Federal Reserve Decision Takes Center Stage
Investors are now preparing for the Federal Reserve’s two-day policy meeting, which is scheduled to conclude on Wednesday.
The central bank is widely expected to leave interest rates unchanged. However, markets will closely examine Fed Chair Kevin Warsh’s comments for clues about the timing of possible rate cuts.
Investors will also look for the Fed’s latest assessment of inflation, economic growth and labor market conditions.
Any indication that policymakers are becoming more concerned about inflation could place renewed pressure on stocks. In contrast, a more dovish message may support risk assets.
Big Tech Earnings Could Drive Market Direction
Several members of the Magnificent Seven are scheduled to publish their quarterly results this week.
Apple, Microsoft, Amazon and Meta Platforms are among the major technology companies preparing to report earnings.
Investors will focus on artificial intelligence investment, cloud computing demand and future capital expenditure plans.
Technology shares have recently come under pressure as markets questioned whether rapidly rising AI costs will deliver strong enough returns.
Positive earnings and confident forecasts could extend the rebound in U.S. stocks. However, weaker guidance may lead to further volatility.
US GDP and Inflation Data Also Awaited
The Federal Reserve meeting and technology earnings will not be the only major events on the economic calendar.
Investors will also receive second-quarter U.S. gross domestic product data, which will provide fresh insight into the strength of the economy.
The personal consumption expenditures price index is also due this week. The PCE index is the Federal Reserve’s preferred measure of inflation.
The data could influence expectations for future interest rate decisions, particularly if inflation or economic growth differs significantly from forecasts.
With oil prices falling, geopolitical tensions easing and several major economic events approaching, Wall Street could face another highly active week.
