After closing dramatically higher, key U.S. index futures point to a stronger open on Tuesday, with equities poised to rise further. Wall Street is rising amid optimism over a second round of U.S.-Iran talks to end the Middle East crisis. Monday, President Donald Trump said Iran has approached the U.S. about resuming peace talks and that “They’d like to make a deal very badly.” The news of potential negotiations has caused U.S. crude oil futures to drop by over 3%. “Previously, the narrative was straightforward: the longer the war dragged on, the worse the outlook for growth, inflation, and risk assets,” said Daniela Hathorn. “The dynamic appears to have flipped.” She said “With a ceasefire framework still loosely in place and the US attempting to control the Strait, the absence of escalation, rather than conflict, is being treated as a positive signal.” Each day without a big disruption to Gulf oil infrastructure is seen as gradual stability.
The Labor Department said that March U.S. producer prices rose less than predicted, boosting Wall Street’s optimism. The Labor Department reported a 0.5 percent increase in March’s producer price index for final demand, matching a downwardly revised February gain. Economists predicted producer prices to rise 1.2 percent vs 0.7 percent the month before. The study also said producer price growth quickened to 4.0 percent in March from 3.4 percent in February. Economic growth was predicted to reach 4.6 percent. Stocks fell early Monday but recovered during the day. Major averages rose from their day’s lows into positive territory. The main average hit session highs late in the day. The Nasdaq rose 280.84 points (1.2 percent) to 23,183.74, the S&P 500 69.35 points (1.0 percent) to 6,886.24, and the Dow 301.68 points to 48,218.25.
Wall Street gained strength as traders monitored Middle East developments following failed U.S.-Iran talks. In a brief news conference, U.S. Vice President JD Vance said they had rejected our terms but left the door open for negotiations. Iran said “unreasonable U.S. demands” stalled negotiations. The news that President Donald Trump has blocked all maritime traffic entering and exiting Iranian ports was ignored by traders. According to the U.S. Central Command, the blockade will apply to any vessels entering or leaving Iranian ports and coastal areas, including those in the Arabian Gulf and Gulf of Oman. Trump said on Truth Social that the US Navy, the world’s best, will block all ships entering or leaving the Strait of Hormuz immediately.
Trump also stated the U.S. military is “locked and loaded” to “finish up the little that is left of Iran” at the “appropriate moment.” The announcement drove up crude oil prices, but traders believe Trump will back down and avert war. Traders also anticipated robust earnings season despite the Middle East conflict. Software equities rose 4.6 percent after recent weakness, sending the Dow Jones U.S. Software Index up. The NYSE Arca Computer Hardware Index rose 4.4 percent, indicating strong computer hardware stocks. Brokerage stocks rose 2.9 percent, lifting the NYSE Arca Broker/Dealer Index. Transportation, semiconductor, and networking companies also rose, while utilities and natural gas fell.