U.S. equity futures climbed on Monday, driven by strong gains in the tech-heavy Nasdaq 100 as diplomatic signals of de-escalation in the Middle East eased investor nerves. A U.S. official said on Sunday that both sides will step back from hostilities and resume talks to end the conflict, raising hopes that an interim peace deal signed earlier this month could remain intact.
The prospect of reduced regional tensions helped lift market sentiment after days of exchanges between the United States and Iran. Nonetheless, investors remain mindful that harsh rhetoric and sporadic flare-ups could still raise the risk of a wider confrontation - a development that would likely put upward pressure on oil prices.
"Predictably, the overtures made by the U.S. and Iran have reversed significantly just before market open once again, with both sides suggesting they’ll wind down strikes ahead of the next round of talks," said Kyle Rodda, senior financial market analyst at Capital.com. "Such overt efforts to lower oil prices and boost stocks by the Trump administration are supporting hopes that it’ll do whatever is necessary to get a deal done."
At 5:00 a.m. ET, S&P 500 E-minis were up 50 points, or 0.68%, while Nasdaq 100 E-minis rose 298.75 points, or 1.02%. Dow E-minis were trading higher by 155 points, or 0.3%. Over the prior week, the blue-chip Dow held up better than the other major benchmarks, posting a 0.6% gain.
AI spending concerns cloud parts of the rally
Beyond geopolitics, uncertainty about corporate investment in artificial intelligence added another layer of volatility. A selloff last week hit favored names such as semiconductor companies and members of the so-called Magnificent Seven, amplifying caution among investors.
Apple was among the underperformers in premarket trading, following a 4.8% slide last week. The company raised prices for iPad and MacBook models on Thursday, citing an inability to continue absorbing sharply higher memory and storage chip costs tied to the AI industry’s data center buildout.
"If consumer demand softens in response, the volumes underpinning record chip margins look increasingly fragile - feeding back into earnings growth skepticism," said Fabien Yip, market analyst at IG.
Traders are also pricing in the expectation of at least one additional Federal Reserve rate hike this year as policymakers seek to keep inflation in check. Market participants will likely revisit those rate-hike odds later in the week when the U.S. jobs report for June is released.
Notable premarket movers
In the early session, SpaceX shares rose 1.2% after Nasdaq announced the newly listed company will be added to the Nasdaq 100 index on July 7. Separately, shares of Viridian Therapeutics jumped 12.7% after the U.S. Food and Drug Administration approved its treatment for patients with thyroid eye disease.
These developments came as investors weighed the interplay between easing geopolitical risks, ongoing questions about AI-driven capital spending and the near-term trajectory of monetary policy.
Market outlook
Markets appear to have taken some comfort from diplomatic progress, but lingering sources of uncertainty - notably around AI demand dynamics and central bank policy - are likely to keep volatility elevated in the near term. The upcoming June jobs data will be a focal point for traders updating expectations for Fed action.