Dow futures suggest a favorable start for Wall Street, as President Donald Trump’s announcement of a ceasefire in the Israel-Iran conflict enhances market sentiment. However, significant uncertainties remain regarding the durability of this cessation of hostilities. Oil prices have declined in the wake of the announcement, whereas gold has also experienced a downturn due to weakening demand for safe-haven assets. At this juncture, attention is focused on Federal Reserve Chair Jerome Powell, who is set to provide testimony to Congress this week amidst significant criticism from Trump.Dow futures indicated an upward trajectory on Tuesday, as market participants reacted positively to Trump’s declaration of a ceasefire in the ongoing conflict between Israel and Iran.
The Dow futures contract experienced an increase of 347 points, reflecting a rise of 0.7%. Meanwhile, S&P 500 futures saw a gain of 48 points, translating to an uptick of 0.8%, and Nasdaq 100 futures advanced by 234 points, marking a growth of 1.0%.The principal indices on Wall Street concluded the previous session with gains, supported by optimism that U.S. engagement in the protracted Israel-Iran air conflict would remain largely limited. Concerns emerged over the weekend regarding the potential for U.S. military action against Iranian nuclear facilities, raising fears of an expanded conflict in the Middle East and the possible disruption of vital oil supplies from the area.
Iran reacted to the assaults by firing missiles at a U.S. military installation in Qatar late on Monday; however, there were no reported injuries. Trump characterized the response as “weak.” Trump has announced that the ceasefire between Israel and Iran is now “in effect,” emphasizing that neither party should breach it. The statement has raised optimism that the 12-day conflict, characterized by lethal air strikes, has reached a conclusion. Trump’s remarks indicated that the ceasefire would be implemented in phases, permitting ongoing operations to conclude. On Tuesday, an Iranian missile strike on Israel resulted in the deaths of four individuals, as reported by Reuters, referencing Israel’s ambulance service. In the interim, Tehran reported that an Israeli attack in northern Iran resulted in the deaths of nine individuals.
Nonetheless, uncertainties lingered regarding the durability of the ceasefire. Israel, in collaboration with the U.S. to eliminate Iran’s nuclear and ballistic missile aspirations, announced an agreement to cease hostilities, with Prime Minister Benjamin Netanyahu stating that the operation had met its goals. Iranian Foreign Minister Abbas Araqchi stated that Tehran does not plan to persist with its retaliatory strikes in the future, yet remains prepared to react to any additional aggression from Israel—a sentiment echoed by Netanyahu.
Oil prices declined following the announcement of a ceasefire, as concerns regarding potential shipping disruptions from the Middle East diminished. Since the onset of the conflict, traders have been monitoring apprehensions regarding Iran’s potential to disrupt crude supplies traversing the Strait of Hormuz, a critical conduit for global shipping situated along the nation’s southern coastline. Oil experienced an initial surge in response to this potentiality; however, it subsequently declined following the perception that Iran’s attack on the U.S. base in Qatar was lackluster and indicative of a de-escalation in regional tensions. Brent crude futures experienced a decline of 3.7%, settling at $67.93 per barrel, whereas U.S. West Texas Intermediate crude futures fell by 3.6% to $66.04 per barrel, marking the lowest point since prior to Israel’s recent military actions against Iran. Oil prices experienced a decline of 9% on Monday.
Gold prices declined by more than 1% during European trading hours, as diminishing geopolitical tensions led investors to move away from safe-haven assets. Spot gold experienced a decline of 1.4%, reaching $3,320.57 per ounce by 03:25 ET, marking its lowest point since June 11. Gold futures for August declined by 1.8%, settling at $3,334.87 per ounce. Meanwhile, news of the ceasefire placed the U.S. dollar under pressure, as an index monitoring the currency against a range of its counterparts declined by 0.4% to 98.06. The euro and the yen appreciated, supported by the decline in oil prices. Both the European Union and Japan depend on crude oil imports, whereas the U.S. operates as a net exporter. Benchmark 10-year Treasury yields remained largely unchanged after a slight decline on Monday, prompted by remarks from a Federal Reserve official supporting a potential interest rate cut in the upcoming month. Yields typically exhibit an inverse relationship with prices.
Markets are shifting their attention from the Middle East to Washington, where Federal Reserve Chair Jerome Powell is set to commence two days of testimony before Congress on Tuesday. Powell is expected to face intense scrutiny regarding the Federal Reserve’s choice to maintain current interest rates during its most recent meeting, as well as its cautious stance on potential adjustments to borrowing costs moving forward. Policymakers, including Powell, have exhibited notable caution regarding the ambiguity associated with the effects of Trump’s assertive tariff strategy.
On Tuesday, Trump persisted in his campaign against Powell, stating on social media that Powell is a “very dumb, hardheaded person.” He advocated for a reduction in rates by at least “two to three points,” contending that the U.S. will bear the consequences of Powell’s “incompetence.” “Crucially, markets may interpret any adjustments in Powell’s stance as a signal that Trump’s political pressure has compromised the Fed’s independence, analysts at ING noted in a communication to clients, emphasizing that this could lead to significant depreciation of the U.S. dollar.”