US futures rise as Iran tensions and tech rally drive markets
Investors weigh elevated oil prices and Federal Reserve rate expectations against strong demand for artificial intelligence stocks as Wall Street opens June.
US stock futures climbed early Monday, extending a powerful rally that saw major indexes close May at record highs. The Nasdaq Composite led the advance, surging more than 8% for the month, while the S&P 500 advanced roughly 5% and the Dow Jones Industrial Average gained nearly 3%. Futures for the Dow and S&P 500 rose 0.4% and 0.2% respectively, with Nasdaq 100 futures up 0.2%, as investors looked to build on the previous month’s momentum.
Market sentiment is heavily influenced by ongoing tensions between the US and Iran, which have kept oil prices elevated and complicated interest rate expectations. President Donald Trump convened advisers in the Situation Room to make a final determination on next steps, reiterating that Iran must never obtain a nuclear weapon and calling for the immediate reopening of the Strait of Hormuz. Oil prices rebounded on Sunday, with West Texas Intermediate crude rising 1.8% to just below $89 a barrel and Brent crude gaining 1.5% to $92. Despite the recent bounce, WTI logged its biggest monthly decline since April 2025, falling nearly 17% in May.
The geopolitical standoff has significantly altered the outlook for US monetary policy. Bond traders are looking to Friday’s nonfarm payrolls report to confirm wagers that the economy is strong enough to push the Federal Reserve to lift interest rates by next year. Traders now see a rate hike by mid-2027, if not sooner, underscoring how the spike in energy prices has upended expectations that Fed Chairman Kevin Warsh would deliver cuts soon after taking over.
George Catrambone, head of fixed income at DWS Americas, noted that rising yields are adding restrictiveness to the US economy. “Yields have risen, and it’s adding restrictiveness to the US economy and doing the work of the Fed,” Catrambone said, highlighting that the jump in bond yields since the conflict began has tightened financial conditions by the equivalent of about three-quarters of a percentage point of rate increases.
Beyond the Middle East, a boom in artificial intelligence continues to drive demand for semiconductors and related gear. Asian share markets firmed on Monday, with Japan’s Nikkei up 0.5% and South Korea’s Kospi rising 1.3%. Nvidia CEO Jensen Huang is set to speak at the Computex trade show in Taiwan on Monday, where he is expected to expound on his company’s latest product efforts and the island’s central role in the industry.
