Summary
U.S. stock-index futures dipped modestly on Sunday after President Donald Trump labeled Iran's response to a U.S. peace proposal "totally unacceptable." Despite the geopolitical development and a sharp rise in oil prices following the president's comments, broader market momentum remained intact, driven by robust gains in chipmaking stocks and signs of economic resilience in the U.S.
Futures movement
By 19:10 ET (23:10 GMT) S&P 500 futures were down 0.1% at 7,408.25 points. Nasdaq 100 futures were essentially flat at 29,339.50 points, while Dow Jones futures slipped 0.2% to 49,581.0 points. Losses in futures contracts were limited as investors weighed the geopolitical news against strong underlying market momentum.
President's reaction and Tehran's response
On Sunday, President Trump described Iran's reply to a U.S. 14-point proposal for ending the war as "totally unacceptable." Reports indicated Iran submitted its response to Pakistani mediators the same day. According to those reports, Tehran rejected U.S. demands to dismantle its nuclear facilities and declined to suspend uranium enrichment for 20 years.
Instead, Iran sought an end to the war and proposed a gradual restoration of commercial shipping through the Strait of Hormuz. Tehran also demanded that the U.S. lift its naval blockade of the country, after which negotiations over the country's nuclear activities would take place within a 30-day window.
The exchange of positions indicated little immediate prospect of de-escalation in the U.S.-Israeli conflict with Iran. Oil prices moved sharply higher after President Trump's characterization of Iran's response.
Recent military tensions
Military tensions in the Middle East escalated last week after Washington attempted a military operation to restore commercial shipping through the Strait of Hormuz. That operation drew attacks from Iran, and Tehran was also seen launching strikes on neighboring Gulf countries. These developments have contributed to an elevated risk environment for energy markets and shipping lanes.
Wall Street at record highs despite geopolitical strains
Even amid the heightened geopolitical backdrop, major U.S. indexes reached record highs on Friday, supported largely by extended gains in the chipmaking sector. The semiconductor group has seen a surge in valuation over the prior two weeks amid increased optimism about demand from the AI industry.
Intel Corporation (NASDAQ:INTC) stood out, rallying nearly 14% to a record high after a report said it struck a preliminary chipmaking agreement with Apple Inc (NASDAQ:AAPL). Broader U.S. equities also benefited from U.S. nonfarm payrolls data for April, which came in stronger than expected and signaled resilience in the economy.
The payrolls print reinforced market expectations that the Federal Reserve will likely keep interest rates unchanged for the remainder of the year.
Closing benchmarks
On Friday the S&P 500 closed up 0.8% at a record 7,398.93 points. The NASDAQ Composite rose 1.7% to a record 26,247.08 points, and the Dow Jones Industrial Average was steady at 49,609.16 points.
What this means for markets
The immediate market reaction to the president's rejection of Iran's response was limited, with futures showing only modest declines. Market participants continue to balance geopolitical and energy-related risks against strong performance in key sectors such as semiconductors and data points indicating economic durability.
Going forward, investors are likely to monitor developments in the Strait of Hormuz, oil-price movements, further military actions, and economic indicators that could influence expectations for monetary policy.