Dow futures jump 277 points as US-Iran ceasefire hopes lift stocks

Mediators push for a new US-Iran ceasefire as oil eases below $90 and tech stocks rebound ahead of a busy earnings week.

US stock futures climbed Tuesday, with the Dow rising 277 points, as hopes for a US-Iran ceasefire fueled a rebound in semiconductor shares.

"This won't be an easy task," ING said in a note. "Large divisions remain between the US and Iran."

Nasdaq 100 futures led the advance, with chip stocks recovering from last week's selloff. Advanced Micro Devices gained 4% in premarket trading, Applied Materials rose 5% and Micron Technology climbed 6%, while Marvell Technology jumped 7% and Intel added 6%. Oracle shares rose 1.3%.

Investor sentiment toward artificial-intelligence stocks remains broadly constructive despite elevated volatility, according to Allspring Global Investments. Markets now turn to earnings from General Motors, Danaher and Charles Schwab later Tuesday, followed by Alphabet, Tesla and IBM on Wednesday.

The ceasefire push comes after Washington carried out a ninth straight night of attacks and Iran retaliated against US Arab allies including Kuwait and Bahrain, with two more vessels hit by projectiles in the Strait of Hormuz. Mediators are working to prevent the conflict from settling into a pattern of sustained disruption that risks a miscalculation escalating into all-out war, the Wall Street Journal reported.

Oil prices eased on the diplomatic signals, with Brent crude falling 1% to trade back below $90 a barrel. West Texas Intermediate slipped 0.7%. The decline in crude helped ease inflation concerns that had weighed on equities last week, though analysts cautioned that any ceasefire remains fragile. Markets are pricing in a 64% chance of a Federal Reserve rate hike by September, according to the CME FedWatch Tool, as persistent energy costs keep inflation elevated.

Gold rose 0.9% to $4,042.69 an ounce as traders weighed the ceasefire prospects against persistent Middle East risks. "Bullion is holding that line despite a firmer dollar and higher yields, as traders weigh Middle East inflation risk against mediation headlines," Saxo Bank said. Silver gained 2.2% to $57.67 an ounce.

Treasury yields inched lower alongside the dip in oil prices, with the 10-year yield declining. The dollar fell slightly as improved risk appetite supported currencies exposed to global trade. The euro could soon fall back below $1.14 if energy prices remain elevated, ING said.

The rebound in tech shares follows a volatile period for global chip stocks, with some investors questioning whether valuations and AI spending had become too high. Fundstrat said investors have been selling AI industry winners in a panic, creating buying opportunities. The Philadelphia Semiconductor Index's recent swings reflect the tension between strong AI demand and concerns about peak spending.

This article is for informational purposes only and does not constitute investment advice.