Wall Street was set for a sharp rebound on Monday as a temporary pause in US-Iran attacks pulled oil prices lower and revived demand for technology, travel and other rate-sensitive shares.
Dow futures jumped 550 points, or 1.05%, while S&P 500 futures rose 0.94% and Nasdaq 100 contracts climbed 1.58%.
The relief rally remains fragile, however, with the Federal Reserve decision and a crowded Big Tech earnings calendar likely to determine whether the early gains can hold through the rest of the week.
5 things to know before Wall Street opens
1. Oil’s retreat resets the opening trade
Brent crude fell about 6% after Washington paused strikes on Iran and Tehran halted retaliatory attacks.
The decline eased fears that another energy shock would keep inflation elevated and force central banks to tighten more aggressively. Lower Treasury yields added to the positive tone in equity futures.
2. Travel stocks lead as energy shares slide
Airlines and cruise operators were the clearest beneficiaries of cheaper fuel.
Delta Air Lines rose 2.6% in premarket trading, American Airlines gained 3%, and Royal Caribbean and Carnival advanced about 3.2% each.
The move went the other way for oil producers. Occidental Petroleum dropped 3.8%, while Exxon Mobil fell 2.6% as traders removed some of the geopolitical premium embedded in crude prices.
3. Middle East risk has not disappeared
The pause in attacks has created room for diplomacy, but it is not a durable settlement.
Shipping through the Strait of Hormuz remained subdued, while Houthi attacks near the Red Sea kept another major trade route under pressure.
Any renewed disruption could reverse oil’s fall and quickly challenge Monday’s risk-on move.
4. Fed uncertainty still hangs over markets
The Fed is widely expected to leave rates unchanged when its two-day meeting concludes on Wednesday, although futures markets indicate a meaningful risk of a surprise increase.
Chair Kevin Warsh’s reduced reliance on forward guidance has made the outlook harder to read.
Investors will therefore focus on the policy statement and press conference for clues on whether another increase could arrive in September.
5. Big Tech faces an AI spending test
Microsoft and Meta report on Wednesday, followed by Amazon and Apple on Thursday.
Investors will scrutinise cloud growth, margins and capital expenditure after concerns about the cash demands of artificial intelligence hit technology shares.
The stakes are high. The Nasdaq remains about 8% below its record, while the Philadelphia Semiconductor Index entered a bear market earlier this month.
Strong guidance could extend Monday’s rebound; another warning about AI costs may expose how little confidence has returned.
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