U.S. stock futures rose Monday night as investors welcomed signs that talks aimed at ending the U.S.-Iran war were making progress, while a sharp drop in oil prices added to the optimistic mood. Dow Jones Industrial Average futures climbed 441 points, or 0.9%, while S&P 500 futures advanced 0.9% and Nasdaq-100 futures gained 1.2%. U.S. markets were closed Monday for the Memorial Day holiday.
President Donald Trump said Monday that discussions with Iran were “proceeding nicely,” though he also warned the U.S. could take offensive action if negotiations fail. His comments helped push crude prices lower, with West Texas Intermediate futures falling about 6% in after-hours trading.
The move came after a strong week for Wall Street. The S&P 500 rose 0.9% last week, extending its longest weekly winning streak since late 2023. The Dow added 2.1%, marking its third weekly gain in four weeks, while the Nasdaq increased 0.5% for the week, its seventh gain in eight weeks.
Some analysts say fundamentals have supported the rally. Adam Parker, founder of Trivariate Research, said earnings growth remains a key driver, noting that profits are expected to rise 23% this year and 16% next year. He argued that even as earnings projections have increased, the price-to-forward-earnings ratio has been modestly contracting, suggesting valuations have not become excessively stretched.
Oil’s decline was another tailwind for equities last week. U.S. crude fell 8.4%, its worst weekly loss since April 17. Still, prices remain elevated compared with earlier in the year, keeping inflation concerns alive and limiting expectations for Federal Reserve rate cuts.
That shift is reflected in market pricing for interest rates. According to the CME Group’s FedWatch tool, traders now see an 8.5% chance of a rate hike in July, up sharply from 0.9% a month earlier. The change shows that investors are becoming less confident that the central bank will soon ease policy, even as some economic and market signals remain supportive of stocks.
With futures higher and energy prices lower, investors are entering the new trading week with renewed optimism, though the outlook remains tied to developments in the Iran talks, oil markets and the Federal Reserve’s next move.
