S&P 500 futures gained 1% early Monday after a weekend pause in fighting between the U.S. and Iran pulled oil prices sharply lower. Traders now face a Federal Reserve rate decision on Wednesday and quarterly results from megacap technology companies.
S&P 500 futures gained 1% early Monday as oil prices declined amid a pause in fighting between the U.S. and Iran over the weekend. Dow Jones Industrial Average futures rose 550 points, or 1.1%, while Nasdaq-100 futures advanced 1.7%.
Oil retreat drives the rebound
Cooling tensions in the Middle East sent Brent crude futures for September delivery down 9.2% to around $87.89 a barrel. U.S. West Texas Intermediate crude futures dropped over 7% to $82.46 a barrel.
Iran reportedly said it would suspend attacks as long as the U.S. pause in hostilities remains in place, easing concerns over nearly two weeks of escalating conflict. Investing.com reported that the drop in crude brought immediate relief to inflation-weary markets.
But energy shares moved the other way. In pre-market trading, Chevron and ExxonMobil were each seen down 2.5%, while ConocoPhillips was down 3.2%.
The rebound follows another losing week for U.S. equities, as a pullback in chip stocks and uncertainty over the war with Iran weighed on investors. The S&P 500 and the Nasdaq slid 0.6% and 2.1% respectively on Friday, posting back-to-back weekly losses.
Megacap earnings test AI spending fears
Quarterly reports from Amazon, Apple, Meta Platforms and Microsoft will either soothe investor fears of rampant artificial intelligence spending or add to them, after Alphabet's disappointing results in the last week. According to CNBC, Mahoney Asset Management CEO Ken Mahoney said: "The biggest risk is the continuation of the spend."
Fed decision lands Wednesday
The Fed will make its latest decision on interest rates on Wednesday. The consensus view is that the central bank will hike rates in September, but markets are pricing in a meaningful possibility that it lifts its benchmark borrowing rate a quarter percentage point as soon as this week, according to the CME FedWatch Tool.
Investors will also parse Chair Kevin Warsh's press conference for clues on the inflation outlook, Investing.com reported. Traders will monitor fresh second-quarter U.S. GDP figures and the June PCE price index later in the week.
Sources: CNBC, Investing.com
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