US stock futures rallied on Monday as investors welcomed a preliminary US-Iran agreement that could end more than three months of conflict and reopen the Strait of Hormuz, easing pressure on oil prices and inflation expectations.
The move gave Wall Street a stronger tone before the open, with technology, airlines and cruise stocks all drawing early interest.
Still, the deal has not resolved Iran’s nuclear programme or tensions linked to Lebanon and Israel.
That leaves traders balancing a clear relief rally against the risk that diplomacy may still stumble before the expected signing in Switzerland on Friday.
5 things to know before Wall Street opens
1. Futures rally as risk appetite returns
Futures tied to the Dow Jones Industrial Average rose 427 points, or 0.8%, while S&P 500 futures advanced 1.2% and Nasdaq 100 futures jumped 2%, pointing to a strong start for Wall Street.
The rally reflected a broad move back into risk assets after Washington and Tehran agreed on a framework to end the conflict and reopen Hormuz.
Max Kettner, chief multi-asset strategist at HSBC Global Investment Research, told Reuters that if the deal proves “credible and lasting”, it should be positive for risk assets.
2. Oil slump puts travel stocks in focus
Crude prices fell more than 4% after the announcement, putting energy-sensitive stocks in play.
Airlines such as Delta and cruise operators including Norwegian Cruise Line could benefit from lower fuel costs.
Energy producers such as Exxon Mobil and Occidental may face pressure as the war premium fades from crude.
Analysts cautioned that Brent could still hover around $80 a barrel as flows through Hormuz normalise and damaged regional infrastructure is repaired.
3. Fed meeting becomes the next test
The oil retreat may ease some inflation anxiety, but it will not remove the focus on the Federal Reserve.
Markets expect rates to remain unchanged this week, with attention on Chair Kevin Warsh’s first meeting and the updated economic projections.
The two-year Treasury yield slipped to a two-week low as traders reassessed the path for rates.
Investors are still pricing in the possibility of at least one 25-basis-point hike before year-end.
4. SpaceX rally keeps IPO market in spotlight
SpaceX shares rose about 6% in premarket trading after closing at $160.95 in their Nasdaq debut, well above the $135 IPO price.
The smooth launch of Elon Musk’s space and satellite company has eased fears around mega-listings and sharpened focus on possible IPOs from OpenAI and Anthropic later this year.
5. Paramount Skydance gains after DOJ clearance
Paramount Skydance rose after the US Justice Department cleared its acquisition of Warner Bros.
The move adds another deal-driven catalyst to a session already shaped by geopolitics, oil and rates.
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