Wall Street futures moved higher on Monday after the United States and Iran announced a pause in hostilities over the weekend, easing fears of a broader Middle East conflict and sending oil prices sharply lower. Investors also turned their attention to one of the busiest weeks of the year for financial markets, with earnings due from four of the “Magnificent Seven” technology companies and the Federal Reserve’s latest policy decision.
According to Reuters, S&P 500 E-mini futures rose 0.87%, Nasdaq-100 futures gained 1.49%, while Dow Jones futures advanced 0.85% in early trading. The move followed a 6.3% decline in Brent crude to around $90.60 a barrel, easing inflation concerns that had unsettled markets last week. (Investing.com Canada)
Lower Oil Prices Fuel Broad Market Rally
The sharp fall in energy prices triggered a rotation into sectors expected to benefit from lower fuel costs.
Reuters reported that Delta Air Lines rose 2.6%, American Airlines gained 3%, while cruise operators Royal Caribbean and Carnival each climbed about 3.2% in pre-market trading. By contrast, lower crude prices weighed on energy stocks, with Occidental Petroleum falling 3.8% and Exxon Mobil losing 2.6%. (Investing.com Canada)
Brent crude had traded above $100 per barrel during the recent conflict after concerns that disruptions around the Strait of Hormuz could tighten global supply. Monday’s decline towards $90 reduced immediate inflation fears and improved expectations that energy costs may become less of a headwind for consumers and businesses. (Euronext Live)
Big Tech Earnings Will Test the AI Trade
Markets are now preparing for quarterly earnings from Microsoft, Meta Platforms, Amazon and Apple, companies that collectively account for more than 20% of the S&P 500’s market capitalisation and have driven much of Wall Street’s gains over the past two years.
Source: investing.com
Investors will focus on cloud computing growth, AI infrastructure spending and capital expenditure plans after Alphabet and Tesla last week reported negative free cash flow, raising fresh questions about whether surging AI investment is translating into stronger profitability. Reuters noted that Microsoft, Amazon and Meta each gained more than 1% in pre-market trading, while Nvidia rose 1.2%, Micron added 3.2% and Marvell Technology climbed 3.5%. (Investing.com Canada)
The results could determine whether investors remain willing to support elevated valuations across the technology sector despite rising AI development costs.
Federal Reserve Takes Centre Stage
The Federal Reserve concludes its two-day policy meeting on Wednesday, with markets widely expecting policymakers to leave benchmark interest rates unchanged. According to Reuters, interest-rate futures imply roughly a 31% probability of a 25-basis-point rate increase this week, although most economists continue to expect the Federal Open Market Committee to keep policy on hold.
Investors will instead focus on Chair Kevin Warsh’s assessment of inflation, economic growth and the outlook for interest rates during the remainder of 2026. (Investing.com Canada) Beyond the Fed decision, investors will also monitor second-quarter US GDP, the Personal Consumption Expenditures (PCE) Price Index—the Fed’s preferred inflation measure—and July employment data later in the week. Together, these releases could reshape expectations for monetary policy heading into the autumn. (Investing.com)
Markets Recover After a Volatile Week
Monday’s rally followed a difficult period for US equities. The technology-heavy Nasdaq Composite remains around 8% below its record high, while the Philadelphia Semiconductor Index has entered bear-market territory after falling more than 20% from its recent peak, according to Reuters.
Recent weakness has reflected concerns over AI-related capital spending, geopolitical tensions and uncertainty surrounding the Federal Reserve’s policy outlook. (Investing.com Canada) The CBOE Volatility Index (VIX) also eased to around 17.7, suggesting investors became more comfortable taking on risk after the weekend’s geopolitical developments. Meanwhile, Russell 2000 futures climbed 1.2%, indicating buying interest extended beyond large-cap technology stocks. (Investing.com Canada)
What Happens Next?
Markets now face several major catalysts within the next few days. Quarterly earnings from Microsoft, Meta, Amazon and Apple will provide fresh insight into corporate AI spending, cloud demand and profit growth, while the Federal Reserve’s policy statement and Chair Warsh’s press conference are expected to shape expectations for interest rates during the second half of the year.
Investors will also continue monitoring developments in the Middle East. Although the pause in US-Iran hostilities has improved risk sentiment and pushed oil prices sharply lower, any renewed disruption to energy supplies or shipping through the Strait of Hormuz could quickly reverse Monday’s relief rally and increase volatility across global equity markets.