U.S. stock-index futures rose on Monday morning, hinting at a continuation of last week’s gains, even as another sequence of military strikes between the United States and Iran complicated prospects for a diplomatic settlement to suspend hostilities.
By 03:23 ET (07:23 GMT), the futures market showed modest advances: the Dow futures contract was up 54 points, or 0.1%; S&P 500 futures had climbed 20 points, or 0.3%; and Nasdaq 100 futures were trading 135 points higher, or about 0.4%. The main Wall Street averages had closed the prior session at fresh record highs and delivered gains for both the month and the week.
Corporate results helped underpin the late-week rally. Dell’s quarterly update, which included an upward revision to its annual profit and revenue outlook, supported investor sentiment and bolstered the tech sector. Semiconductor stocks in particular helped power the advance in technology shares.
Market strategists at Deutsche Bank said that recent optimism around a potential deal between the U.S. and Iran had eased concerns that a conflict-triggered energy shock could precipitate stagnant economic growth accompanied by persistent inflation. That reduction in geopolitical anxiety boosted the appeal of risk assets in May and aided a recovery in government bonds following a steep mid-month sell-off.
New strikes dampen immediate hopes for ceasefire extension
Despite the tentative momentum toward a diplomatic accord, the possibility of a near-term deal was tempered by a fresh exchange of strikes. According to U.S. military statements, American forces struck radar installations and drone control sites inside Iran after Tehran shot down an American drone over the weekend. Iran confirmed it had launched a retaliatory strike, and Kuwait signaled it had intercepted incoming drone and missile fire.
At the same time, Israeli forces have moved to expand control over a portion of neighboring Lebanon in response to drone launches attributed to Iran-aligned Hezbollah militants.
In Washington, the U.S. president expressed the view that Iran intends to reach a deal, while both sides continued to negotiate over outstanding issues, notably Iran’s nuclear program. The president is reviewing a proposed memorandum of understanding that would reportedly extend an existing ceasefire, call for the resumption of shipping through the Strait of Hormuz, and provide a framework for further discussions on Tehran’s nuclear activities. Iran’s chief negotiator on Sunday emphasized that Tehran would not accept an accord that failed to protect the country’s rights.
Brent rises as markets weigh lingering shipping risks
Energy markets reacted to the evolving security situation. Brent crude futures, the global benchmark, rose 3.1% to $93.92 a barrel at 03:56 ET. While talk of a U.S.-Iran ceasefire extension has helped cap some price extremes, Brent remains markedly above pre-war levels.
Analysts at Vital Knowledge have argued that this persistence reflects market expectations that even if an agreement is reached, shipping traffic through the Strait of Hormuz is unlikely to rebound quickly. They suggested that Iran’s continued capacity to influence transit through the strait will sustain a geopolitical risk premium in oil markets for months.
Oil has been a central focus for investors since the onset of the Iran war in late February. The effective shutdown of the Strait of Hormuz - a channel that handles about a fifth of the world’s oil and natural gas shipments - pushed energy prices higher and stoked concerns about an inflationary impulse that could pressure economies worldwide. Those inflation worries, in turn, have raised the risk that central banks might respond by tightening policy, which could reduce the relative appeal of higher-risk assets such as equities.
Key U.S. data in focus - ISM manufacturing
Economic releases remain in the foreground as investors judge whether the Iran conflict will translate into higher inflation or slower growth. On Monday, markets were set to receive the Institute for Supply Management’s gauge of U.S. manufacturing activity for May.
Consensus expectations had the ISM manufacturing purchasing managers’ index at 53.3 for May, up from 52.7 in April; readings above 50 signal expansion. Economists also expected the ISM prices-paid component to rise slightly, to 85.3 from 84.6 in April, which could offer additional insight into inflationary pressures facing manufacturers.
Nvidia introduces Windows-focused AI processors
In the technology sector, Nvidia unveiled a new processor line for Microsoft’s Windows platform that will be integrated into a range of laptops and desktop PCs. At the COMPUTEX conference in Taiwan, CEO Jensen Huang introduced the RTX Spark family, highlighting the N1X processor as the central component.
The N1X is a custom chip developed in cooperation with Microsoft and designed by MediaTek of Taiwan. Nvidia said the processors are based on Arm’s platform and emphasized that the hardware is intended primarily to run locally hosted artificial intelligence agents. The company also noted it worked with the Windows team on the accompanying software platform to support these capabilities.
What this means for markets and investors
The combination of geopolitics, energy market dynamics and corporate technology developments is producing a mixed backdrop for investors. Near-term volatility is being shaped by fresh military exchanges that have interrupted hopes for a swift normalization of shipping through the Strait of Hormuz. At the same time, corporate updates and new product announcements - such as Nvidia’s Windows-focused N1X core - are driving pockets of risk-on sentiment in equities, especially within the semiconductor and broader tech complex.
Traders will be watching the ISM manufacturing report for evidence of whether inflation pressures are intensifying alongside any demand slowdown triggered by higher energy costs. Monetary policy implications remain a key channel by which energy and inflation developments could feed back into asset prices.
Summary
U.S. futures moved higher early on Monday, extending gains from last week despite a renewed round of strikes between the U.S. and Iran that cloud prospects for a ceasefire extension. Brent crude advanced to $93.92 a barrel, reflecting sustained geopolitical risk in the Strait of Hormuz. Markets awaited ISM manufacturing data for further clarity on inflation and growth, while Nvidia launched the RTX Spark family featuring the N1X processor for Windows PCs to support local AI agents.