US stock futures traded with modest gains on Thursday, 7 May, after headline indices touched fresh record highs amid hopes that the US and Iran are moving closer to an agreement to end the two-month-long conflict in the Middle East.
Futures tied to the S&P 500 rose 0.1%, while those linked to the Nasdaq Composite and Dow Jones Industrial Average also traded with similar gains. In the previous session, all three key averages closed over 1% higher, with the Nasdaq and S&P 500 hitting fresh record highs once again.
Investor sentiment was buoyed by expectations of easing tensions in the Middle East and better-than-expected performances from major technology companies, which powered the rally in US equities that had earlier come under pressure from elevated crude oil prices.
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US stock futures traded with modest gains due to hopes that the US and Iran are moving closer to an agreement to end the Middle East conflict. Investor sentiment was also buoyed by better-than-expected performances from major technology companies.
Crude oil prices drifted lower as investors weighed the possibility of a US-Iran peace deal. Hopes for easing tensions and a potential end to the conflict led to a decline in oil prices.
The S&P 500 and Nasdaq closed at fresh record highs, supported by easing tensions in the Middle East and strong earnings from tech companies like AMD. Investor sentiment was positive due to the prospect of a US-Iran agreement and the ongoing AI trade.
Reports suggest the US and Iran are reviewing proposals to end the conflict, which could lead to the reopening of the Strait of Hormuz. This optimism has caused crude oil prices to fall significantly.
Fortinet surged after forecasting earnings above expectations, and DoorDash rallied on strong guidance. However, Arm Holdings fell after warning about weakness in the smartphone market, indicating selective investor interest in tech.
The latest media reports suggested that Iran was reviewing the latest American proposals aimed at ending the conflict. The reports indicated that the US had sent a one-page memorandum of understanding through Pakistani intermediaries to formally end the conflict and pave the way for the gradual reopening of the Strait of Hormuz.
On Wednesday, Axios reported, citing two US officials and two other sources briefed on the matter, that the White House believes it is nearing a one-page, 14-point memorandum of understanding to end the war and establish a framework for more detailed nuclear talks.
US President Donald Trump posted on social media that the two-month war could soon end, and that oil and natural gas shipments disrupted by the conflict could restart. However, he said that would depend on Iran accepting a reported agreement, the details of which were not disclosed.
Trump also warned Iran of a fresh wave of bombings unless a deal was reached that included reopening the crucial Strait of Hormuz to international shipping. A fragile ceasefire between the US and Iran has largely held since 8 April. However, in-person talks between the two countries hosted by Pakistan last month failed to produce an agreement.
In the currency market, the US dollar headed for its weakest week in over a month, while global bonds extended their rally as inflationary pressures eased.
Investors are now awaiting the US non-farm payrolls report due on Friday. Economists surveyed by Reuters expect the US economy to have added 62,000 jobs in April after payrolls rebounded by 178,000 in March.
Crude oil prices remain under pressure
Crude oil prices continued to drift lower for the third straight trading session, with benchmark US crude falling another $4.8 to around $90 a barrel after dropping $7 in the previous session.
Brent crude, the international benchmark, declined $4.5 to an intraday low of $96.77 a barrel, extending losses that erased the sharp gains recorded earlier this week.
However, Brent crude still remains well above the roughly $70-per-barrel level seen before the conflict with Iran began.
US stocks in focus today
Vested Finance said falling oil prices are easing inflation concerns and reviving hopes that the Federal Reserve could eventually pivot back toward rate cuts later this year.
According to the brokerage, the AI trade continues to support equities. Fortinet surged nearly 15% in premarket trading after forecasting earnings above expectations. DoorDash also rallied on strong guidance, signalling resilient consumer demand despite macroeconomic uncertainty.
However, Vested Finance pointed out that not every technology company participated in the rally. Arm Holdings fell after warning about weakness in the smartphone market, showing that investors are becoming more selective about which AI and semiconductor stories they want to own, it said.
Disclaimer: We advise investors to check with certified experts before making any investment decisions.
