Key Takeaways:
US stock futures pointed higher Monday as progress in Iran negotiations pushed oil prices lower, though traders braced for key inflation data that could reinforce the case for a Federal Reserve rate hike as soon as October.
Nasdaq-100 futures rose 0.4% on Monday as traders returned from the Juneteenth holiday to news of a roadmap toward a final Iran deal within 60 days.
"The progress in Iran talks removes a significant geopolitical overhang and should keep oil from spiking, which is a net positive for equities," said Tom Lee, head of research at Fundstrat Global Advisors. "But the market's focus will quickly shift to Thursday's PCE reading."
S&P 500 futures traded near the flatline, while Dow Jones Industrial Average futures added 48 points, or 0.1%. The muted open follows a strong week that saw the S&P 500 gain nearly 1% for its 11th winning week in 12, the Dow rise close to 1%, and the Nasdaq Composite advance more than 2%. Brent crude fell 1.6% to $79.30 a barrel, while West Texas Intermediate dropped 0.8% to $76, after mediators from Qatar and Pakistan said US and Iranian officials had agreed on a framework to end hostilities.
The week's main event is Thursday's release of the personal consumption expenditures price index for May, the Federal Reserve's preferred inflation gauge. Core PCE is expected to accelerate from April, according to FactSet, after the Fed's hawkish June meeting pulled forward expectations for an interest rate increase to as soon as October. A hotter-than-expected reading could reinforce that timeline and pressure equities.
Micron Technology was among the early outperformers in pre-market trading, rising more than 5% ahead of its quarterly report due Wednesday after the bell. The chipmaker's results will provide a key test for the semiconductor sector, which has led much of this year's rally. SpaceX fell nearly 5%, putting it on track for its third straight daily decline.
The Iran negotiations represent the most significant diplomatic breakthrough since the conflict began. Technical talks are expected to continue this week in the Swiss mountain resort of Buergenstock, with both sides agreeing on a mechanism to end fighting in Lebanon and open a communications line for safe passage through the Strait of Hormuz. A small number of ships were seen crossing the strait Monday, though traffic remained far below pre-war levels. US Vice President JD Vance said he "could see a future where everyone can work together to promote peace and prosperity," while Pakistan's prime minister and Iran's foreign ministry also hailed progress.
In Asia, Japan's Nikkei 225 surged past the 72,000 mark for the first time, driven by AI-led optimism and easing geopolitical concerns, while Chinese blue-chip stocks rose 1.6%. European markets were mixed, with the STOXX 600 down 0.1% and London's FTSE 100 falling to a one-week low as political uncertainty weighed after Prime Minister Keir Starmer said he would resign.
Fundstrat's Lee said that while conditions remain favorable for stocks in the near term, an abrupt change in market conditions could arrive later this year. "I think conditions are still favorable for stocks," he said on CNBC's "Closing Bell." "But we don't want to stand and call a top."
This article is for informational purposes only and does not constitute investment advice.
