Stock Index Futures Rally as Oil Prices Tumble on U.S.-Iran Talks

June S&P 500 E-Mini futures (ESM26) are up +1.53%, and June Nasdaq 100 E-Mini futures (NQM26) are up +1.57% this morning, pointing to a sharply higher open on Wall Street as sentiment got a boost after U.S. President Donald Trump said the U.S. and Iran had “very good” conversations about ending the Middle East conflict.

President Trump said in a Truth Social post on Monday that the U.S. and Iran have engaged in very good and productive discussions over the past two days. “Based on the tenor and tone of these in-depth, detailed, and constructive conversations, which will continue throughout the week, I have instructed the Department of War to postpone any and all military strikes against Iranian power plans and energy infrastructure for a five-day period,” Trump said. The price of WTI crude plunged over -6% on Monday, while Treasury yields were little changed.

However, stock index futures pared some of their gains after Iran’s semi-official Fars agency reported that Tehran had no direct or indirect contact with Trump.

Stock index futures initially moved sharply lower amid fears of a potential escalation in the Middle East conflict after the U.S. and Iran hardened their rhetoric over the weekend. U.S. President Donald Trump warned on Saturday that the U.S. would strike Iranian power plants, beginning with its largest, if Tehran does not permit ships to transit the Strait of Hormuz by Monday evening Washington time. Iran said on Sunday it would target the energy and water infrastructure of its Gulf neighbors in retaliation if President Trump followed through.

This week, investors will also focus on a fresh batch of U.S. economic data and comments from Federal Reserve officials.

In Friday’s trading session, Wall Street’s major equity averages closed sharply lower. The Magnificent Seven stocks slid, with Nvidia (NVDA) and Tesla (TSLA) falling over -3%. Also, chip and AI-infrastructure stocks sank, with Sandisk (SNDK) slumping more than -8% and Intel (INTC) dropping -5%. In addition, Super Micro Computer (SMCI) plummeted over -33% and was the top percentage loser on the S&P 500 after the U.S. government charged a company co-founder and two other individuals with participating in a scheme to divert U.S.-assembled servers to China in violation of export-control laws. On the bullish side, Planet Labs (PL) soared over +25% after the Earth imaging company posted upbeat FQ4 results and issued above-consensus FY27 revenue guidance.

“Investors initially thought that the Iran war would be short. But as aggressions intensify amid no light at the end of the tunnel, the pain on Wall Street continues,” said Jose Torres at Interactive Brokers.

Fed Governor Christopher Waller said on Friday he remains cautious about the inflationary impact of surging oil prices amid the Middle East conflict, though a softening labor market could still warrant interest-rate cuts later this year. Separately, Fed Vice Chair for Supervision Michelle Bowman said she still supports three interest-rate cuts this year and expects solid economic growth, while closely monitoring the impact of the Middle East conflict. “It’s too soon to tell what the impacts of Iran and the conflict may be, but I do expect that we’ll start to see some of the supply-side policies working their way through the economy,” Bowman said.

U.S. rate futures have priced in an 85.5% chance of no rate change and a 14.5% chance of a 25 basis point rate hike at the next FOMC meeting in April.

Fed Chair Jerome Powell on Saturday praised the policy legacy of former Fed Chair Paul Volcker, who raised interest rates to levels that triggered a recession and drew sharp criticism from Congress and the Reagan White House, but stayed the course until inflation was brought under control. In pre-recorded video remarks to the American Society for Public Administration’s annual conference, which presented Powell with the Paul Volcker Public Integrity Award, the Fed chair commended his predecessor’s resolve in withstanding political pressure. “His willingness to resist short-term pressures in the interest of achieving lasting price stability demonstrated the courage and long-term perspective that define principled public service,” Powell said. 

This week, market participants will closely watch preliminary U.S. March purchasing managers’ surveys for manufacturing and services, which will provide an early read on how businesses have held up during the Middle East conflict that has triggered a surge in oil prices. “This is significant because it’s one of the first economic indicators we’ll get that cover the period since the conflict began,” Deutsche Bank economists said. The final March reading of the University of Michigan’s consumer sentiment index will also attract attention. The survey will show whether Americans became even more worried about soaring gasoline prices than they were earlier in the month. Other noteworthy data releases include U.S. Nonfarm Productivity, Unit Labor Costs, the Richmond Fed Manufacturing Index, the Import Price Index, the Export Price Index, and Initial Jobless Claims.

Meanwhile, the OECD is set to release its latest Interim Economic Outlook this week, the first assessment of the global economy and all G20 nations since the outbreak of the conflict. The projections may provide a preview of the more detailed forecasts that the International Monetary Fund releases in mid-April.

Investors will also hear perspectives from several Fed officials after the central bank decided to leave rates unchanged last week while it assesses the economic impact of the Middle East conflict. Fed Vice Chair Philip Jefferson, Fed Governors Michael Barr, Lisa Cook, and Stephen Miran, along with San Francisco Fed President Mary Daly and Philadelphia Fed President Anna Paulson, are scheduled to speak this week.

In addition, several notable companies, including meme-stock retailer GameStop (GME), pet supplies retailer Chewy (CHWY), and homebuilder KB Home (KBH), are set to report their quarterly results this week.

Today, investors will focus on U.S. Construction Spending data, set to be released in a couple of hours. Economists forecast the January figure at +0.1% m/m, compared to +0.3% m/m in December.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.39%, up +0.05%.

The Euro Stoxx 50 Index is up +1.16% this morning, bouncing back sharply from a drop of more than -2% earlier in the session after President Trump announced that the U.S. will suspend attacks on Iranian energy infrastructure for five days. Airline and luxury stocks climbed on Monday. At the same time, energy stocks plunged. Goldman Sachs said on Monday it expects the European Central Bank to implement two 25-basis-point rate hikes in April and June, joining peers JPMorgan and Barclays as policymakers highlight inflation risks stemming from the Middle East conflict. ECB Vice President Luis de Guindos said in an interview published on Monday that the central bank cannot stop a surge in inflation caused by sharply higher energy prices, but must respond if it believes rapid price growth risks becoming entrenched. Investors this week will closely monitor Eurozone PMI data for March, which will offer insights into how the Middle East conflict and the recent surge in energy prices have affected business sentiment. Market watchers will also focus on Germany’s Ifo business climate index for March and Spain’s preliminary March inflation figures, along with comments from European Central Bank officials, including President Christine Lagarde and chief economist Philip Lane. In corporate news, Delivery Hero SE (DHER.D.DX) gained about +0.5% after the company said it had agreed to sell its delivery-platform business in Taiwan to Grab Holdings for $600 million in cash.

The European economic data slate is mainly empty on Monday.

Asian stock markets today settled in the red. China’s Shanghai Composite Index (SHCOMP) closed down -3.63%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -3.48%.

China’s Shanghai Composite Index closed sharply lower and hit a 3-month low today, mirroring regional declines amid continued concerns about the Middle East conflict. Investors are growing more concerned that the prolonged Middle East conflict will fuel inflation and dampen growth. Goldman Sachs economists said that the conflict’s impact on China “hinges on both the demand and supply situation outside of China.” If global demand deteriorates sharply because of the conflict and surging oil prices, “Chinese exports and growth would come under considerable pressure,” the economists said. Investors on Monday sold off stocks viewed as most exposed to soaring oil prices and weakening demand, with agriculture, tourism, and consumption shares among the biggest decliners. Gold mining and property stocks also cratered. The benchmark index posted its largest one-day percentage drop since April 2025. Meanwhile, Chinese Premier Li Qiang pledged on Sunday to further open the nation’s economy to foreign companies and seek more balanced trade with global partners to attract investment. In corporate news, China Petroleum & Chemical Corp. slid over -3% in Hong Kong after the energy major reported a decline in 2025 net profit. Investor attention this week is on China’s industrial profit data for the January-February period and whether it is consistent with stronger-than-expected activity data released earlier this month. “Markets will watch for any improvement from the sluggish 0.6% year-on-year growth rate in 2025,” ING economists said.

Japan’s Nikkei 225 Stock Index closed sharply lower today as the risk of further escalation in the Middle East conflict intensified, stoking risk-off sentiment. Tokyo’s market was catching up with global benchmarks after Friday’s public holiday. Losses were broad-based on Monday, with real estate, energy, and metal stocks leading the declines. Rising Japanese government bond yields further heightened caution in the equity market. The benchmark 10-year JGB yield rose to a two-month high on Monday amid inflation concerns. Reuters reported on Monday that Japan is weighing a reduction in buybacks of inflation-linked government bonds as investor demand grows amid rising inflation expectations. The rise in yields and oil prices is contributing to yen weakness even after Bank of Japan Governor Kazuo Ueda left the prospect of an April rate hike open at last week’s policy meeting. The Japanese currency weakened 0.2% against the dollar on Monday. Meanwhile, Japan’s top currency diplomat, Atsushi Mimura, said on Monday that the government stands ready to take appropriate measures on all fronts to address volatility in foreign exchange markets. In other news, preliminary results from annual labor negotiations showed on Monday that Japanese companies have agreed to increase wages by more than 5% for a third straight year, strengthening conditions for another BOJ rate hike. Investors are now shifting their focus to Japan’s February National Core CPI data, scheduled for release on Tuesday. Economists expect nationwide inflationary pressures to ease in February, aided by government energy subsidies. However, it will likely be a temporary phenomenon given the spike in oil prices amid the Middle East conflict. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +16.71% to 40.93.

Pre-Market U.S. Stock Movers

The Magnificent Seven stocks advanced in pre-market trading amid risk-on sentiment, with Nvidia (NVDA) rising over +2% and Meta Platforms (META) gaining more than +1%.

Chip and AI-infrastructure stocks rose in pre-market trading, with Marvell Technology (MRVL) and Western Digital (WDC) gaining over +2%.

Airline stocks rallied in pre-market trading amid a slump in oil prices, with United Airlines (UAL) and American Airlines (AAL) jumping over +4%.

Synopsys (SNPS) climbed more than +2% in pre-market trading after the Wall Street Journal reported that Elliott Investment Management had built a multibillion-dollar stake in the chip-design software maker.

Energy stocks slid in pre-market trading, with the price of WTI crude down more than -6%. APA Corp. (APA) is down over -2% and Diamondback Energy (FANG) is down more than -1%.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Monday - March 23rd

AGI Inc (AGBK), Caledonia Mining Corporation (CMCL), Gamehaus Holdings (GMHS), BTCS Inc. (BTCS).