US stock futures surged on Monday after Washington and Tehran reached a preliminary agreement aimed at ending the Iran conflict and reopening the Strait of Hormuz, triggering a sharp decline in oil prices and boosting investor sentiment.
The prospect of renewed energy flows through one of the world’s most important shipping routes sent Brent crude to its lowest level since April, easing concerns over inflation and reducing expectations that interest rates may need to remain elevated for longer.
Ahead of the opening bell, futures indicated the Dow Jones Industrial Average would rise 0.8%, while the S&P 500 was up 1.2%. The technology-focused Nasdaq 100 led gains, advancing 2% in premarket trading.
Airline stocks were among the strongest performers as lower fuel costs improved earnings expectations across the sector. United Airlines gained 4.4%, Delta Air Lines rose 4.0%, and American Airlines added 3.5%.
Travel and leisure stocks also benefited from the improving economic outlook, with cruise operators Norwegian Cruise Line and Carnival rising 4.3% and 3.6% respectively.
Technology stocks moved higher as investors responded to the dual benefit of falling energy prices and reduced pressure on central banks to tighten monetary policy further.
Memory chip manufacturer Micron Technology surged 8.2% after several brokerages raised their price targets, while artificial intelligence leader Nvidia gained 2.3%. Intel advanced 3.1% and Marvell Technology climbed 5.4%.
The market reaction highlights how quickly investor sentiment has shifted following news of a potential diplomatic resolution in the Middle East. Lower oil prices are expected to ease inflationary pressures, improve consumer spending prospects and support corporate profitability across a wide range of sectors.
Investors will now focus on the formal signing of the agreement expected in Switzerland later this week, with markets likely to remain highly sensitive to any developments that could affect the reopening of the Strait of Hormuz and the future direction of global energy prices.
