May 26 - U.S. equity futures extended gains to record territory on Tuesday as traders weighed signs of progress in Middle East diplomacy against continued uncertainty, while technology chip names rallied on AI-related optimism.
Comments from U.S. officials helped keep hopes alive that a negotiated arrangement with Iran could be reached soon. U.S. Secretary of State Marco Rubio said negotiating the deal could "take a few days," and President Donald Trump posted on Truth Social on Monday that talks with Iran were going "nicely." Despite those remarks, uncertainty remained about whether an agreement would open shipping lanes through the Strait of Hormuz.
Energy markets reacted to the ongoing diplomatic developments. Brent crude oil rose as much as 3%, reflecting concern about potential disruptions to Gulf shipping even as optimism over talks supported broader risk appetite in equities.
Investor appetite for risk was reflected in futures pricing. At 04:50 a.m. ET, Dow E-minis were up 244 points, or 0.48%, S&P 500 E-minis were up 38.75 points, or 0.52%, and Nasdaq 100 E-minis were up 228.25 points, or 0.77%. U.S. markets were closed on Monday for the Memorial Day holiday.
Market participants cited a willingness to buy market pullbacks on the view that the conflict would ultimately calm. "Investors still appear willing to buy dips on the assumption that the conflict ultimately de-escalates," said Daniela Hathorn, senior market analyst at Capital.com.
Semiconductor stocks were notable leaders in the early moves as AI-related demand continued to underpin the sector. Marvell Technology rose 5.7%, while Micron and Intel added about 2% each in premarket trading. The broader backdrop of AI-driven enthusiasm in chip names has been a key factor in recent equity strength.
Wall Street's push to fresh highs has been supported by upbeat earnings and sustained confidence in AI-related trades, even as the conflict with Iran persists. The blue-chip Dow recorded its first record since the Iran war began on Friday, becoming the last major index to reach that milestone. The S&P 500 extended a strong run, posting its best winning streak since December 2023.
With the bulk of corporate results now in, first-quarter earnings expectations have been revised upward. LSEG data from Friday showed anticipated year-on-year first-quarter earnings growth of 29%, up from a 16.1% estimate a month earlier.
On the policy front, Kevin Warsh was sworn in as chair of the Federal Reserve on Friday. His appointment comes amid concerns about inflation pressures that have been reinforced by higher oil prices, which in turn have contributed to assumptions of tighter global monetary policy. Markets are currently priced to expect the Fed to hold rates for the remainder of the year, with a 25 basis point hike anticipated in December.
Investors will also monitor domestic consumption indicators. U.S. consumer confidence data for May is due later in the day, and higher gasoline prices linked to the Middle East tensions are expected to weigh on sentiment.
Among early individual movers, Joyy surged 12.3% after the Chinese social live-streaming platform reported first-quarter revenue above expectations, underscoring how select earnings beats continue to move stocks sharply.
Other market snapshots and ticker moves were mixed across instruments and timeframes, but the overarching tone in early trading was one of constructive risk-taking, supported by hopes for de-escalation in the Middle East and by concentrated strength in AI-exposed technology names.
What to watch next
- Consumer confidence data for May, which could reflect the impact of higher gasoline prices on household sentiment.
- Further developments in the U.S.-Iran negotiations and any confirmation about reopening shipping through the Strait of Hormuz.
- Evolving signals from corporate earnings and AI demand that continue to influence semiconductor and broader technology sector performance.