U.S. equity futures edged down Monday evening after the governments of Israel and Iran said they would pause attacks on each other for the time being. The move toward deescalation coincided with a modest rebound in semiconductor stocks, which had been among the steepest decliners in last week’s sell-off.
By 20:12 ET (00:12 GMT), S&P 500 futures were down 0.2% at 7,398.75 points. Nasdaq 100 futures fell about 0.3% to 29,375.0, while Dow Jones futures traded 0.2% lower at 50,750.0.
Futures slipped following a mixed session on Wall Street in which chipmakers recovered some of the ground they lost in the prior session, while other sectors showed little directional conviction amid ongoing uncertainty about the wider economic fallout from the U.S.-Israel conflict with Iran.
Geopolitical developments
Iran and Israel both announced on Monday that they would stop attacking one another for now, a step prompted in part by an appeal from U.S. leadership to deescalate hostilities. Despite the temporary pause, Tehran cautioned that it would resume strikes if Israel continued operations against Hezbollah in Lebanon.
Officials reported a fresh wave of exchanges on Sunday, complicating diplomatic efforts to end the broader regional conflict. Negotiations with Iran were said to be continuing, with U.S. commentary suggesting a ceasefire or peace arrangement could be near.
Speaking at a virtual rally, the U.S. political leader asserted that the U.S. had "decimated" Iran’s military and leadership, and suggested an imminent end to the conflict. "I think we are winning that battle, but you’re really gonna win it over the next two weeks when we declare total victory... and oil prices will come tumbling down," he said.
The status of Israel’s operations in Lebanon remained a central sticking point. Iran has maintained that any settlement should include a halt to Israeli actions in Lebanon, and Tehran characterized Sunday’s retaliatory strikes as a response to aggression near Beirut. Israel has not agreed to stop its campaign in Lebanon, and has engaged repeatedly with the Iran-backed Hezbollah.
Meanwhile, Iran kept the Strait of Hormuz largely blocked amid hostilities with the U.S. and Israel, a dynamic that has supported oil prices and added a layer of inflation risk for markets.
Market context and drivers
On the cash market, Wall Street posted a mixed recovery after substantial losses the previous week. The NASDAQ Composite led the rebound, driven largely by a bounce in chipmaking stocks that had been hit hard on Friday amid renewed skepticism about the long-term profitability of the artificial intelligence trade.
The S&P 500 finished with modest gains, while the Dow Jones Industrial Average declined, reflecting lingering worry over the economic implications of the Iran war and its potential repercussions for growth and corporate profits.
Investor attention this week centered on consumer inflation data for May, scheduled for release on Wednesday. Markets were braced for that print to offer further evidence on how the Iran-related supply disruptions and elevated fuel costs might be feeding through to broader inflation. Earlier CPI releases for March and April had shown notable upward pressure on inflation, attributed in part to rising energy prices and shipping interruptions.
Outlook
Sentiment in markets remained delicate, with concerns about additional tech-sector losses and incoming macroeconomic data keeping investors cautious. With a temporary pause in strikes offering some relief on the geopolitical front, attention has shifted back to domestic inflation signals that could influence central bank thinking and interest-rate expectations.